Property Market Outlook for 2021
17 Feb 21
Logistics have of course been the property success story of 2020 and there is little sign of this abating in 2021, with national industrial vacancy remaining at a near all-time low… Meanwhile retail has had a tough time in 2020 with the closure of non-essential stores. Once we are ‘allowed out’ there is likely to be a spending bounce back, but things won’t be the same.
2020 was one bumpy ride for property markets. We take a look under the hood of the economy to see what might be in store for 2021, and what that might mean for planning and development.
The Chancellor propped up the housing market in 2020 with a stamp duty holiday that kept mortgage approvals comparable to 2019 and house prices on the rise, reaching an all-time high. Both the stamp duty holiday and Help to Buy were due to end in March ‘21 but with the announcement that the Help to Buy deadline will be extended to the end of May (and the same being considered for the stamp duty holiday), this might stretch out the reprieve. Beyond this, weak house price growth in 2021 (and beyond) is likely reflecting a challenging economic backdrop and Brexit headwinds. But in planning terms we expect business as usual – and more – with plenty of pent up demand for homes plus statutory targets on completions and supply putting authorities under pressure to deliver.
Logistics have of course been the property success story of 2020 and there is little sign of this abating in 2021, with national industrial vacancy remaining at a near all-time low. The shift towards e-commerce retailing is expected to be structural, fast forwarding recent trends. Smaller urban last mile facilities remain in high demand as operators look to improve coverage and capacity. New larger facilities need the power to cope with automation and height / space for expanding inventories as we move from ‘just in time’ to ‘just in case’. As a resilient (and critical) sector in an uncertain economic outlook needing more technical skills and improving sustainability credentials, planning authorities are becoming increasingly more sympathetic to the need for ‘sheds’.
Meanwhile retail has had a tough time in 2020 with the closure of non-essential stores. Once we are ‘allowed out’ there is likely to be a spending bounce back, but things won’t be the same. We have already seen the first out of town retail park turn to logistics (Ravenside, Edmonton acquired by Prologis) and the reinvention of retail space and our high streets in particular is expected to keep us planners busy for some time yet.
With the closure of offices and more people working from home, office transactions are at an all-time low and demand is expected to remain weak in 2021. Both in and out of town offices are seeing continued pressure for alternative uses. However, most of us recognise the productivity challenges of virtual team work and the clear need for face-to-face business space. We might be needing less space overall in the future but break out zones, meeting rooms and informal areas will be more critical than ever.
Iceni’s Economics team provides best in class planning evidence and justification and we were delighted to be appointed to the Homes England Economics Framework 2020-24. To find out more about us, take a look at our showcase document, or get in touch.