The impact COVID-19 has had on the property industry

by | Sep 9, 2020 | Blog, COVID-19

A guest blog by ETP Property Consultants

The COVID-19 crisis has had an unprecedented impact on the UK property industry, not only for those in the market to buy and sell, but also for those who offer commercial and advisory work such as Chartered Surveyors and property consultants.

To help reduce the impact the industry has seen throughout the pandemic, the UK Government introduced several relief measures to help businesses with property costs. It has, for example, granted a 12-month business rates holiday for retail, leisure, and hospitality businesses, and introduced a short-term moratorium on forfeiture for non-payment of certain amounts, including rent. In April, the Government also announced plans to introduce legislation temporarily preventing the use of statutory demands and commercial rent arrears recovery by landlords against tenants who are unable to pay rent due to the pandemic.

Despite these measures, the industry is struggling and with fears that the economic recovery will take some time, something needs to be done to further assist landlords, tenants, and the whole commercial property ecosystem.

As Property Consultants, Alastair, and his team at ETP have experienced all the ups and downs of the pandemic and have kindly agreed to share their experience and advice to aid others. This blog showcases the impacts the virus has had on the industry, but also shares ETPs plans to thrive by accelerating their business forward to become more agile and resilient.

The Short and Long-Term Impact of COVID-19 on a Property Business

 Like many other businesses, Alastair saw his activity levels drop at the start of the pandemic with all his enquiries falling away. This unfortunately resulted in a drop in turnover of 80% when compared to the previous month in 2019. This meant a number of staff had to be furloughed. Luckily, this was however only a short-term impact and they are now back to full capacity and in the throes of expanding the team and service offering.

Since the market has started to pick up and the relief measures have been introduced, ETP have quickly rallied and are now back up to pre-COVID levels of activity. The number of enquiries coming in have increased substantially over the last few months from lenders, landlords and investor seeking support. Due to this increased demand and their established heritage in Bristol, ETP are confident they will continue to strive in the South West market.

This positive outlook has allowed them to productively use the period of downtime to diversify their offerings and re-establish themselves in the market. With homeworking already in place, they had time to rationalise, plan for the future and re-visit areas that had been on the backburner.

They have been able put a lot of thought and effort into re-branding their business, to include a new website, logo, report templates and marketing materials. They also took the decision to ensure clients will always have a senior point of contact moving forward.

With the introduction of new services, an expending team, and a re-established brand, ETP should be able to set themselves apart and continue moving forward whilst also becoming more resilient to market forces. They are on their way to achieve their pre COVID-19 plan for service expansion and increased geographic presence but now also need to consider how to build a stable income flow as this is now more relevant than ever before.

Alastair has already seen a number of larger firms already begin to shed staff and streamline their businesses to meet shareholder expectations and mid-sized regional operators squeezed to keep in line with price pressures from the larger firms. ETP are therefore in the prominent position to step up and stand out from the competition as they’ve used their time wisely to re-strategise, re-evaluate and re-position themselves in this highly competitive market.

Alastair’s Industry Advice and Guidance

 Commercial Opportunity

The property market has become ever more polarized, and the pre-market trends have been accelerated as a direct result of COVID-19.  Within the commercial market, this presents a fantastic opportunity for pragmatic landlords to engage with their tenants and enhance the investment value of their portfolios. Considering the three main markets (retail, offices and industrial), the latter is best placed to perform well in the mid-term.

Retail Space

 Generally speaking, the retail market was already in the doldrums and COVID -19 has accelerated this downturn further.  That said, there has been a flight to quality and to convenience, and this has been evident in the seeming resurgence of suburban high streets. As a result, ETP have negotiated rental increases on behalf of Landlords in areas such as Clifton Village and Gloucester Road, where demand remains strong, and have also let a number of shops in tertiary locations such as Withywood and Bishopsworth, where the need to shop locally rather than rely on public transport has become ever more important. Alastair’s advice to investors is to get in touch and explore these opportunities before the market reacts.

Office Space

The office market is going to fundamentally change, although ETP do not foresee the 40% drops in rental values that are expected in London transitioning to Bristol.  High rise offices that are reliant on lifts to move workers up and down are struggling due to the need for social distancing, however, these are few and far in between in Bristol.  Notwithstanding COVID-19, there have been a number of high-profile lettings during the lockdown period, however, there are reduced levels of market activity compared to last year.  ETP have worked with landlords and tenants who seek to remain in occupation and are willing to extend their leases in exchange for rent free in the short term to better manage cashflow.  They have also seen a growth in the number of COVID-19 clauses demanded by tenants. Alastair’s advice is once again to get in touch at the earliest opportunity so you can understand how to best maximise value.

Industrial Space

The industrial market is performing very well currently.  Demand for well-located distribution units of all sizes has surged, as have rents, which have now exceeded £10 per sq ft in some locations. In addition, supply is limited. With such an exaggerated imbalance in market forces, this has created a number of opportunities and, equally, a number of headaches. Tenants now need to be properly represented more than ever, not such to find space and negotiate, but also to think “outside the box” in a market that is not overly transparent.

For investors and Landlords, this is an opportunity to agree pre-lets and build flexible accommodation; subdivide existing unwanted space and re-gear/rebase existing leases to a higher passing rent in exchange for short term rent free.  The latter is perhaps the most influential as it allows for a fixed minimum rent at review stages.

Opportunities in the Residential Market

Broadly speaking, the residential market, which is not particularly dynamic, has undergone a rapid period of flux.  The market stalled in Q2 2020 and then has accelerated from June onwards.  This has largely been driven activity in the sub £500k market and professional landlords expanding their portfolios.  With more investments being managed by fewer investors, we anticipate rental values will increase in the near future. Conversely, due to the pandemic, Landlords are seeking more detailed references to ensure the tenant has a secure income and is not likely to lose their job.

If you need any advice or support from Alastair on any of the above guidance, feel free to contact his or a member of his team by visiting or calling  01179 731474.

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