5 trends to watch in UK real estate in 2020

From sustainability to the need to find new urban living solutions, what do the next 12 months have in store for UK real estate?

January 05, 2020

Amid Brexit, climate change and concerns about corporate social responsibility, real estate is at a turning point.

Today’s companies are increasingly having to rethink old business models and outdated workspaces to find new ways of working - and driving growth - that not only boost productivity and engagement among employees but also support the environment and add value to communities.

Investors are increasingly exploring new real estate sectors that can deliver both strong returns and fresh solutions to the growing challenges facing rapidly urbanising and ageing societies. From city warehousing to new styles of urban living, 2020 will see emerging trends gain traction. Landlords, meanwhile, are increasingly spending time curating buildings to create vibrant, amenity-filled spaces.

So just what does it all mean for the UK’s property market in 2020? Here’s our take on some of the key trends to look out for over the next 12 months:

1: Growing pace of urbanisation

Urbanisation shows no sign of slowing, says Jon Neale, head of UK Research at JLL. “By 2025, we expect there to be an extra 2.5 million people living in the UK’s city centres.

“As these urban populations expand, so will demand for housing, shops, leisure facilities, warehouses and office space. Real estate will need to adapt as competition for space intensifies; whether that’s offering flexible workspaces or multi-storey warehouses.”

City centre jobs growth will likely be focused on the tech and service sectors, with companies battling to attract the skilled workforces they need to thrive. Sectors like life sciences are also taking note; they know this increasingly means locating in urban innovation clusters that offer coworking spaces to encourage collaboration.

2: Adopting a more sustainable point of view

Climate change remains high on the agenda with the UK Government committing to hit net zero carbon by 2050. The focus will be on mapping out the journey ahead to ensure buildings and operations meet ambitious net zero carbon goals.

Companies will also pay closer attention to their social impact in their decision-making. Air pollution, for example, will become a key consideration for both businesses looking at new offices and workers choosing where to live.

3: An office is no longer just somewhere to work

Changing work styles will continue to reshape traditional office spaces in 2020. Landlords are increasingly aware of the need to create people-centric spaces and are spending more time ensuring they have the right mix of tenants and amenities, especially as leases shorten and tenant expectations rise.

New uses like bike storage or electric vehicle charging, for example, are being added to the mix. Meanwhile, in-house cafes and restaurants serving a variety of healthy and high-quality food are providing the hospitality services that today’s employees want.

Building design and management will also become more focused on health and wellbeing. Creating well-designed spaces, with good lighting and heating systems, or quiet spaces away from the hubbub of open-plan offices can all help boost employee productivity and engagement.

4: Growth of new urban housing solutions

As more people move into cities, new urban living solutions will be needed. Neale says the Build-to-Rent sector will grow rapidly in 2020.

“As urban life gets more expensive, the benefits of renting, rather than home ownership are becoming more apparent in these city locations,” he adds.

Co-living providers are expected to move out of London to other urban centres and retirement living schemes offering amenities, and care where needed, will grow.

5: Technology becomes more integrated

2020 is the year companies will invest heavily in tech and data as digital solutions gain momentum. “Technology investment will be all about improving the day-to-day employee experience,” says Neale.

That could include everything from sensor-based lighting systems to using workplace apps to book meeting rooms. Such features can also be good for companies’ sustainability goals and their finances. As Neale says: “Crucially, these changes will also drive performance or efficiency benefits.”