COMMENT Making predictions is never easy; doing so in 2019 looks like a mug’s game. While you write your own punchline to that, I’ll have a go. My only advantage is that I’m doing so from the 18th floor of 22 Bishopsgate, EC2. The view of London is extensive, with sight of the issues that will affect real estate in 2019 nationally.
1. Look along the river and you’ll see Westminster, where the most profound decisions to affect property will be deliberated (or ducked). The most significant consequences revolve around 29 March, of course, but many are already being felt and will continue to be so in the months, years and perhaps decades that follow.
2. Squint and you can see Homes England just behind parliament. More bank than regulator, and more proactive than most government agencies, its energy will help accelerate housing delivery nationally in 2019.
3. For London’s housing crisis to ease in 2019, we’ll need greater co-operation between government and City Hall, just across the river. With preparations for the 2020 mayoral election campaigns set to ramp up, don’t hold your breath.
4. They may be less headline-grabbing in the occupational market than tech companies, but there’s a lot of banks down there. They will stay cautious on loan-to-value ratios, furthering opportunities for emerging debt providers.
5. You can still see cranes in all directions, despite reported falls in office construction. There’s nothing to make you disbelieve the most recent Deloitte Crane Survey’s findings that the development pipeline over the next three years will soften by 11%. But it makes you wonder how what is sure to be a surplus of second-hand offices will be absorbed.
6. You’d have to pay me a lot of money to go up in one of those cranes. In fact, you’d have to pay anyone a lot of money to go up in one; labour costs in the global construction sector are rising by 5.6% a year. That pressure – and pressure on materials costs – won’t ease in 2019.
7. That’s 77 Leadenhall Street, EC3, near Aldgate Station just below us where WeWork agreed a 74,301 sq ft letting over Christmas. You can’t see all of its 45 UK locations, but the flexible workplace revolution is visible from British Land’s Storey just behind Liverpool Street station up to The Office Group’s stylish setup at Derwent London’s White Collar Factory.
8. Sometimes it’s what you can’t see. Environmental and social infrastructure isn’t so visible from a bird’s eye view in a built-up area but there will be a great focus on real assets in 2019. And you’d need a clear day and exceptional vision to see the sort of undersupplied regional markets which the likes of Clearbell see as office development opportunities.
9. Is that an administrator scurrying into HMV on Oxford Street? Its 980,000 sq ft retail portfolio (equivalent to 30.6m CDs or 11.4m LP sleeves; yes, Radius Data Exchange can calculate anything) may account for a fraction of the 18 m sq ft of space lost in 2018 to a raft of CVAs, store closures and administrations, but HMV would be a symbolic loss. It moves us closer too to the day when a high street collapse makes everyone (consumers, politicians, landlords, investors and more) sit up, take notice and act in unison.
10. With UK internet sales in November accounting for 21.5% of total sales, you can see the underlying cause most clearly to the east. Urban logistics has accounted for the industrial revolution of recent years. Full pricing might relegate investment opportunities from primary to secondary markets. But within sight of here there will be more truly mixed-use planning apps in 2019 to sate demand.