A recent article in the Financial Times reported on something that we in the property sector have known for some time - that a chasm is opening up in the market.
The dichotomy identified is between buildings which are flexible and green, and those which are not. Best-in-class buildings, which have strong green credentials, will continue to attract occupiers, who are increasingly committing to a net-zero carbon future and seeking to attract and retain the best talent. In fact, we may even see a bidding war for the best space, if supply does not continue to meet demand.
Mark Allan, chief executive of Landsec, was reported to have said that for the rest "there will be accelerated obsolescence”. This will be a sobering thought for those landlords holding stock which does not meet the needs of the modern occupier. Investors too will be looking to park their capital in these best-in-class spaces, further widening the split in the market.
Occupiers should take note, especially those with lease events coming up (these days you should be looking at least two years out) - as competition for these prime spaces can be expected to be fierce. Equally, for those occupiers who do not need or want a best-in-class building, there could be some significant opportunities in the market. Get in touch with your property agents now, or speak to Forsters' Occupiers team.
The market is splitting in two, between modern, flexible spaces and older buildings whose value is likely to decline