The world feels like a pretty challenging place at the moment for both businesses and commercial landlords. The set-up of businesses is changing, working from home (or hybrid working) becoming an option, shopping habits changing, the cost of living crisis, and AI and the digital revolution having an increasingly greater impact. All of this means that commercial property landlords in particular are under pressure to react and adapt all of the time.
One of the new trends that we are seeing in commercial property is the increase in the number of mixed-use properties. The properties could be used for housing as well as office space or retail units, or offices that also house retail units, hospitality, restaurants, or leisure facilities such as gyms or cinemas.
A Hybrid World
We now live in a hybrid world. Especially since the COVID-19 pandemic, we have been looking for ways that have taken us away from structure and permanence, and towards hybrid living and flexibility – whether it is working, living, or shopping, and this is one of the main trends that leads the way for the growth in mixed-use properties.
Mixed-use properties combine residential, industrial, or retail properties to the benefit of those who inhabit them. To have leisure facilities, commercial or public facilities, or shops and restaurants close to where you live or work is, of course beneficial. Not only is it useful for people who live or work there to have several options close by on where to spend their time and money, but it is also beneficial to businesses that can take advantage of other passing trade, without too much competition.
Another effect of the increase in mixed-use properties is that they can help to bolster the local community as more people live and/or work and spend their free time in the same place, getting to know each other, strengthening ties, and boosting interaction between the people who use the spaces.
Re-Purposing of Buildings
In addition to the construction of new buildings, one of the methods that are used in the process of creating mixed-use properties is the re-purposing of existing buildings. This is a great way to ensure that buildings are not sitting empty for long periods of time but also ensures that property space is properly utilised.
Some examples of this involve converting large department stores into leisure facilities such as cinemas or restaurants. Some office spaces have been re-purposed into residential, hospitality, or even retail into restaurants or vice versa.
Substantial research is required before re-purposing can begin in a property. Importantly, you should ensure that there is sufficient demand for the type of property that you are looking to create (for example, is the area in need of more office space, restaurants, or retail outlets?). You would then need to check that it is possible within the space that you have – do you have sufficient plumbing and a separate kitchen for a restaurant, for example, or will you need to carry out more structural work on the property?
One of the benefits of creating these hybrid properties is that unlike in the past, where entire properties have been re-purposed, in the world today, smaller areas can be re-purposed. For example, a large department store can be easily re-purposed to include smaller retail units downstairs, then a leisure complex – soft play, or cinema, for example, upstairs. Or perhaps, a block of residential flats could incorporate restaurants on the ground floor. Factories can be re-purposed as warehouse space, hotels, offices to rent, or even trampoline parks or escape rooms, and houses into doctor’s surgeries, for example.
Sustainability
It is estimated that the construction industry creates about 40% of the world’s carbon emissions. And about 11% of that comes from the acquisition and use of construction materials and the building process itself. At present, the ‘greenest’ way to effectively create extra residential or commercial property is through the re-purposing and adaptation of existing buildings. In short, it is very wasteful to build high quantities of new property when there are existing properties not being used – and this is also reflected in the cost as well as adding value!
With construction processes and materials increasingly being incorporated into the analysis of the eco-credentials of a building, this has never been so important for both landlords and businesses that occupy commercial property.
In addition to this, the presence of mixed-use properties can often mean that there is a reduced need to travel, saving both money for consumers, and petrol and travel costs.
Research
For the re-purposing of a commercial property to be successful, it is essential that research is first carried out. This is not just about the building and what sectors would work in the space. You should also look at the area and what kind of properties that it is requiring – this could go as far as looking at the demographics of the area as well as important factors such as location and transport links. There is no point, for example, building a hotel in an area where there are terrible transport links and nowhere to visit. Likewise, a leisure complex with a soft play might be the perfect idea for an area with young people and plenty of families.
Final Thoughts
Here at Boxpod, we take a great interest in the movements of the commercial property market, and the world is changing quickly – accelerated by the COVID-19 pandemic. One trend that looks like it is here to stay is the rise of mixed-use and re-purposed buildings. They are not only convenient for those living and working nearby but also more sustainable for the environment. They ensure that all of the available space is used effectively, instead of constructing new buildings, but it must be done intelligently, and with enough research into the process as well as when deciding on the property type.
If you are a commercial property landlord or business looking for a new commercial base, why not take a look at what we have to offer and get in touch?