This article, from a firm operating in a specialist area of property linking luxury and motorsports, describes the kind of trends it expects to unfold over coming years, shaped in part by changes stemming from COVID-19 and the disruptions it has caused.

The COVID-19 pandemic, and all of the disruption to normal life it has caused, has clearly affected sectors such as residential and commercial property. What medium-term trends are worth examining now, given the changes to commercial and social life caused by the virus and government's reactions to it? 

One perspective comes from Escapade Living, a firm involved in building residences at the Silverstone racing circuit – pitched very much at sports enthusiasts – an example of niche areas flourishing in the property industry space. Its CEO, Will Tindall, casts his eye over the whole property sector in the UK to ask what sort of trends will play out. 

The editors are pleased to share these insights and welcome readers’ reactions. As ever, the team at this publication don’t endorse all views of guest writers. Email tom.burroughes@wealthbriefing.com and jackie.bennion@clearviewpublishing.com.

It’s less Mark Twain, and more Charles Darwin. The American writer famously quipped, on learning that a newspaper had published his obituary: “reports of my death have been greatly exaggerated.”

So it is with commercial property which, since COVID-19 plunged Britain into lockdown, has been variously described as enfeebled, moribund and fatally wounded.

Such characterisations make for good headlines but don’t reflect reality.

Instead, commercial property - an asset class prized for its ability to deliver long-term, steady yields - has been catapulted into a period of breakneck evolution of which Darwin would have been proud.

Natural selection
Changes to the way Britons live, work, play and shop that might have taken decades to evolve have been compressed into the space of just a few months - with the commercial property sector being transformed as a result.

Glitzy, city centre office and retail spaces are no longer the prime investments they once were. Ditto city centre hotels. The permanent closure of the Hilton’s flagship, 44-storey hotel on New York’s Times Square hints at an asset class left reeling by the collapse in both business and leisure travel.

The jury is still out on what proportion of the millions of professionals currently working from home will go back to the office in the post-COVID world.

But with both employers and employees reassessing the need for - and value of - trekking into a crowded office building every day, the commuting map is being permanently redrawn.

Other seismic shifts in consumer behaviour are here to stay too. At its peak during lockdown, online shopping accounted for a third of all retail spending in the UK. While it has since slipped back from that high watermark, online retail sales in August were up by almost 50 per cent on their pre-pandemic level.

Finally, restrictions on foreign travel have prompted a surge in the popularity of staycations, with thousands of Britons opting to holiday in the UK rather than abroad.

Hunting for yield
With savings rates already near zero, the Bank of England is seriously contemplating cutting interest rates into negative territory - even blue-chip equities are no longer paying dividends, and yield is indeed a rare species .

For those seeking to capture it, commercial property investments which tap into the emerging trends outlined above are well worth considering. Here are a few promising hunting grounds:

Self-contained, UK-based holiday accommodation
While interest in staycations has surged, social distancing rules and people’s desire to be in a private space away from home have focused demand on self-contained, rather than hotel accommodation.

The day on which the government lifted restrictions on overnight stays in June, the luxury lodge specialist Hoseasons reportedly took a booking every 11 seconds. Britons who’d been locked down for nearly three months were clamouring to escape their homes.

With quarantine restrictions and even closed borders still making foreign travel difficult, demand for good quality holiday accommodation in the UK is proving robust.

Established players such as Center Parcs allow investors to take a long-term lease on fully-managed holiday homes, paying a guaranteed and fixed rental income.

Out of town co-working spaces
The global giant WeWork has blazed a trail through the office rental business, attracting admirers and critics in roughly equal measure.

Its large-scale model, in which it leases big buildings in big cities and sublets space to business tenants on flexible terms, is unsuited to a world in which the trendy professionals it appeals to are mostly working from home.

However, new, more agile players have emerged to offer similarly cool spaces in residential areas away from the bright city lights. For homeworkers itching to swap their own four walls for a funky and COVID-safe workspace down the road, it’s a compelling offer.

One of the best to tap into this new niche is the Birch Community. A previously underperforming hotel set in 55 acres in Hertfordshire, it has been given a new lease of life and has just been recognised as “Hotel of the Year” by The Times and Sunday Times.

Warehouses
Once the ugly duckling of commercial property, the boom in online retail has sent demand for warehouse space soaring.

At the top end are the vast, largely automated distribution centres typically located near motorway intersections. But a new trend has emerged with the uptick in next-day and even same-day delivery - smaller, ‘last-mile’ units in urban areas.

Warehouses tend to be low maintenance properties, which prioritise efficiency over aesthetics. The shift from high street to online retail may have been turbocharged by the pandemic, but it is here to stay - with tenants more likely to sign a multiyear lease for a warehouse than for a shop.

Investors searching for a good blend of exposure to the sector can do so through the Warehouse REIT.

Luxury, experiential hospitality
Lockdowns and their anxious aftermath didn’t just limit people’s physical movements, they also constrained their experiences.

Experiential travel - in which the traveller immerses themself in a destination rather than superficially seeing or “doing” it - is going to be a key trend in the post-COVID-19 travel industry.

Investors with an eye on the future are already buying properties at Escapade Silverstone - a development of 60 luxury residences being built just yards from the legendary tarmac of one of the world’s most famous racetracks. They are being marketed to wealthy investors from around the world. (The firm predicts that they will generate net annual yields of up to 6.5 per cent for their owners when they open to paying guests in 2022.)

Franchises, from flat whites to fitness
Although not technically a commercial property play, buying a franchise business that fits in with Britons’ post-COVID-19 lifestyles can offer similar long-term, regular yields.

One in seven Britons is a member of a gym, and while attendance at city centre gyms has fallen sharply since homeworking became the norm, sites in residential areas have seen user numbers bounce back since lockdown restrictions were lifted in the summer.

With the pandemic making many of us more conscious of our health, some gyms are even reporting increased sign-ups. The fitness industry as a whole has grown rapidly for over a decade, and buying a gym franchise in an underserved area – and then appointing a gym manager to run it - offers a relatively easy way to enter the market.

The nationwide chains Anytime Fitness, énergie and F45 are all open to franchise investors.

Finally, for all the hoopla about homeworking spelling the “death of Pret”, former office workers have not suddenly fallen out of love with coffee. Those who miss the daily ritual of popping out for a frothy cup are now just as likely to seek their caffeine fix closer to home.

Attractive coffee shops with reliable, free Wi-Fi in affluent areas are therefore a good bet. Franchises are currently available from Esquires Coffee and the upscale US brand Greenberry’s, as well as the mobile chain Coffee Blue.

As with any investing, diversification has always been the key mantra for a commercial property portfolio. Where previously it was about having a broad mix of retail, office and industrial properties, the seismic shifts in behaviour caused by the events of 2020 make it hard to believe this approach will continue to deliver.

Instead, an astute commercial property investor should be diversifying across sub-sectors and gaining exposure to the long-term trends that are likely to survive well beyond the pandemic.