Britain saw the biggest rise in vacant shops in over two decades late last year and the sharpest increase in empty offices since the financial crisis, highlighting how the COVID-19 pandemic is reshaping the economy, at least temporarily.
The Royal Institution of Chartered Surveyors (RICS) said its quarterly commercial property survey showed a swing in demand towards industrial space — such as warehouses to service booming online shopping — and away from traditional retail and offices.
“Both the office and retail sectors continue to see occupier and investor demand diminish, with expectations for rents and capital values remaining deeply negative for the time being,” RICS economist Tarrant Parsons said.
Surveyors do not expect any rise in office or retail rents for the next year at least.
Britain is rolling out COVID-19 vaccines rapidly, but the government expects restrictions to persist for months, and some changes in work patterns and shopping habits may be permanent.
Official data last week showed that 45% of working adults were working from home, the highest since June, after new lockdown restrictions came in across Britain earlier this month.
RICS said office demand was weaker in London than elsewhere, especially away from prime locations.
Nonessential retailers are closed, accelerating a shift towards online shopping, which accounted for 30% of retail spending in December, up from 19% a year earlier.
Many British high streets are now losing key tenants, following the collapse of 200-year-old department store chain Debenhams and a retreat from flagship sites by others such as Frasers Group, formerly known as Sports Direct.
(Reporting by David Milliken; editing by William Schomberg)