Published December 2021
As 2022 fast approaches, we explore the key points to consider for the year ahead, when it comes to commercial property.
The energy performance of our built environment is of ever increasing importance. In 2022 we expect to see landlords/tenants thinking even more closely about the impact of MEEs regulations and starting to take action, for example by planning the sale of poorly rated assets or investing and improving them. COP26 has brought sustainability to the fore, and whilst the Budget funded 54 local authorities with a view to equipping them for MEEs enforcement, CSR and moral conscience are equally as motivating.
MEEs affects funders as well. Lenders/banks are paying increasing attention to the environmental performance of loan security, with scrutiny taking place at an earlier stage in the credit process than before, and we expect this to gain momentum. Lenders/banks are mindful that how “green” their loan books are, may become (if it is not already) a factor in their success.
Industrial and distribution
Activity in the sales and lettings of industrial and distribution warehousing is seeing a period of rapid growth, almost certainly in response to the change to our shopping habits and our growing reliance on the logistics infrastructure. There is a shortfall of quality supply, so this trend looks set to continue in 2022. The recent Kent Property Market Report highlighted that several speculative storage and distribution schemes either under construction or recently completed in the region are already fully let. Locally, there is a demand for such space and if new B1 stock can be delivered, it will bring significant benefits for both employment and business growth.
Developers will continue to keep their eyes on the ball in 2022. Supply chain issues have been well publicised - building material costs and increased risk of delay to goods, labour or both need careful management. The impact of the Government’s “First Homes” policy – applicable since 28 June 2021 and controlled through the s106 – will begin to be felt in 2022. Under the policy house builders obtaining permission for residential development will need to dispose of at least 25% of dwellings on any given scheme as First Homes. Simply put, First Homes are homes which can only be sold to a limited class of “eligible buyers” for a minimum of 30% below market value both upon first and subsequent sales, and for a maximum price of £250,000 or £420,000 in Greater London. For residential developers with annual profits exceeding £25m, there is also an additional 4% tax to fund the replacement of unsafe cladding on existing properties to navigate.
If one is reassured by predictability, we predict the usual background chatter of planning reform and consultations, in which we hope new opportunities will be found.