Step Four of Colliers International Strategic Advisory’s 5-Step Strategic Property Playbook offers a look into what changes will occur post COVID-19 as part of the new business as usual.
The economic downturn brought on by the COVID19 pandemic have required a major adjustment in how business is conducted and will continue to have profound impacts across the economy including on property market conditions.
The changes we have experienced in work practices across all industries will have an impact in the post-COVID19 world. The COVID19 economic downturn is a major disruption that needs to be bridged by all institutions and corporations as failure to do so could be catastrophic, albeit there is an interim period where business is conducted under emergency conditions until recovery begins.
There will likely be a period of 18 to 24 months until markets start to recover from the economic impact of the pandemic. The organisations that will survive (and prosper) will be those who have made opportunistic transactions, have grasped new business opportunities, have managed to pivot and for many, preserved assets through a successful hibernation with a plan to rapidly engage with the post-COVID19 market.
Post COVID19, the emergence of the new ‘business as usual’ will have a number of characteristics, some of which will be new and unexpected, some already displayed and of course in some areas there will be a reversion to previously accepted practices. A few post-COVID19 changes that we anticipate as being part of the new business as usual environment include:
• An increase in the adoption of digital and remote working technology across all business including video conferencing, on-line shopping and an uptake in distributed working spaces and build to rent accommodation;
• Flexible work may also be adopted more widely post recovery, as working from home or other out-of-office locations can increase efficiencies and save on costs for many businesses. It should be noted, however, that:
o Take-up will vary depending on an employee’s personal circumstances and their ability to access an adequate home office set up. Although many will want to go back to the office environment, some, particularly senior management, will have found that the working from home environment is more productive due to modern communications and conferencing.
o The office may therefore become a base rather than a full-time location for the corporate worker, with some personnel working at the office full time and others coming and going.
• Corporate office space requirements may be reduced, although the requirement for social distancing may necessitate an increase in the allocated area per person. Tenancy fitouts may change to reflect new social distancing protocols, in turn adopting similar features to that of the home.
• Older office buildings may be repurposed, with flow on affects impacting supply.
• Some workers may choose to live outside of Capital Cities which could ease pressure on housing and traffic in the State Capitals. This change could then see new trends in both metropolitan and regional housing markets.
• Social distancing will likely revert to long standing traditions, except that people may wear face masks in public when they have flu or cold symptoms. This is the norm in many Asian countries already.
• Shopping will be a different experience. Retail centres will need to reconfigure their service offering, taking into consideration the new ways people will want to interreact in social environments.
• Post recovery there is also likely to be pent up demand for housing, shopping, travel and hospitality and events. Against this, a new generation may be more frugal at seeking value and controlling their household debt.
• There will be an opening up of borders and a potential increase in immigration, after a period of lockdown, and continuance of household creation.
• The Industrial sector is anticipated to benefit greatly in the post recovery environment, with exponential increases in e-commerce and the need to bring some manufacturing of essential goods on shore to boost supply chain security.
• There may also be greater government involvement and regulation in the private sector given the economic investment made to businesses and individuals during the upswing of the pandemic. It is possible that the government will monitor health issues and individual behaviours more closely in the new business environment and that there will be more vigilance regarding overseas investment.
While overarching business fundamentals will not change, businesses will now need to ensure ongoing contingency plans are in place and that risk management frameworks have the agility to adapt quickly to changing market conditions.
Communications and business plans, which consider different scenarios, and which provide multiple contingency options, will be crucial for businesses to succeed in the post-COVID19 environment and business decisions will need to be based on accurate and up-to-date information.
A comprehensive property strategy aligned to your business strategy can maximise the potential of your operations during changing market conditions and indeed in the new post-COVID19 business era as well. If you would like to learn more or to find out how a tailored property strategy can be implemented to ensure your success in the new ‘business as usual’ environment, please contact one of our senior strategic advisors today.