Guides & Advice

Commercial Real Estate Continues to Transition | Lockdown 3.0

Published: 19th January 2021
Area: Property Litigation

In an earlier blog, we considered the impact of Lockdown 2.0 on the commercial real estate market.

One of the trends we anticipated was expecting businesses to adapt by further trimming back their space requirements which were likely to be matched by a greater move to businesses taking short term flexible agreements, and a shift to serviced office space which can often be handed back at short notice.

Lockdown 3.0 - What now?

It is expected these trends will continue well into 2021 and beyond due, at least in part, to the uncertainty created by the further, possibly more open-ended lockdown 3.0. We’re already seeing, various flexible alternative types of space being made available by savvy landlords and taken up by increasingly agile tenants.

These flexible arrangements can take different forms. At one end of the spectrum, tenants are taking virtual desks (where companies may pay to have their registered office and post sent to etc) without a particular physical footprint. This is enabling companies to benefit from being registered at prestigious postcodes/locations without the hefty prime office rents. We see many commercial landlords offering this service. Universities are also offering their flexible working spaces and conference facilities adapting to the market and seeking to take advantage of the benefits of co-working spaces.

Moving along the range of options to actually taking physical space, this can involve renting hot desks, private offices, serviced offices.

We are also now seeing the rise of so called “managed offices”. This is taking the concept of serviced offices one step further and can include landlords working with landlords actively working with tenants to create and provide bespoke fully fitted out offices/collaboration space as specifically required by the tenants in return for monthly payments. This goes beyond simply providing a “plug and play” service. In addition, these providers, including a number of new entrants to the market, are competing to provide ever greater facilities ranging from cafes/bars to gyms and roof terrace relaxation space.

In short, there are many opportunities for both landlords and tenants to overhaul and modernise their working spaces and there is real merit in exploring the market now and seeking to seize those opportunities.

What else can we expect?

The Government has announced that a review of the commercial landlord and tenant legislation will be launched this year. It seems that there is a growing acknowledgement that the longstanding legislation does not always reflect or work as well as it should do in the current environment.

This review will consider potential changes to how commercial leases are governed with a view to helping ensure our high streets and town centres survive and thrive after the pandemic, as well as looking at how commercial landlords and tenants can collaborate more effectively and efficiently to “keep their finances stable, protect jobs and build back better”, according to Business Secretary, Alok Sharma

We will have to wait and see as to whether any proposed changes will be beneficial (and to whom) but for now the review does create more uncertainty in the market, not least as security of tenure of business tenants will be up for consideration. We will be monitoring this closely.

Contact us

For further advice on the options available to you as a landlord or as a tenant, please contact James Fownes or another real estate team in your local office.

How can we help?

Our expert lawyers are ready to help you with a wide range of legal services, use the search below or call us on: 0330 024 0333

SHMA® ON DEMAND

Listen to our SHMA® ON DEMAND content covering a broad range of topics to help support you and your business.

Agriculture: diversifying or leasing your land to create habitat banks

6 Jul

Peter Snodgrass, Partner & Head of Agriculture
Agriculture: diversifying or leasing your land to create habitat banks

We know that biodiversity net gains provide a significant opportunity for landowners to diversify […]

Teachers’ Pension Scheme – strategic issues independent schools need to think about

20 Jul

Esther Maxwell, Legal Director | Emma Glazzard, Solicitor
Teachers’ Pension Scheme – strategic issues independent schools need to think about

Webinar Teachers’ Pension Scheme – strategic issues independent schools need to think about In […]

Misconduct outside the workplace and business disrepute

8 Sep

Michael Hibbs, Partner
Misconduct outside the workplace and business disrepute

In this webinar, Mike Hibbs – Partner and Robin Gronbech - Solicitor in our […]

Preparing for business exit and beyond

24 Jun

Jody Webb, Partner
Preparing for business exit and beyond

When your business has been your life, how do you separate the emotional investment […]

Our Latest Thoughts

All the latest views and insights on current topics.

The Building Safety Act 2022 – how it will affect house builders

19 May

Real Estate & Planning

The Building Safety Act 2022 – how it will affect house builders

Read article Right Arrow

Biodiversity Net Gain – opportunities and obligations for developers and landowners alike

11 Apr

Real Estate & Planning

Biodiversity Net Gain – opportunities and obligations for developers and landowners alike

Read article Right Arrow

The rationale for rationalising housing stock – post-pandemic

8 Apr

Real Estate & Planning

The rationale for rationalising housing stock – post-pandemic

Read article Right Arrow

Nutrient neutrality – how might it affect development

4 Apr

Real Estate & Planning

Nutrient neutrality – how might it affect development

Read article Right Arrow

The nationally significant infrastructure project regime and development consent orders – how to have your say

3 Apr

Real Estate & Planning

The nationally significant infrastructure project regime and development consent orders – how to have your say

Read article Right Arrow