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John Lewis deal signposts key commercial property growth sector

Covid-19 has reshaped the commercial property market and as a result, new opportunities in non-traditional sectors are appearing for investors. The announcement of a major property investment project by John Lewis has underlined the potential of a key area.

Like many other retailers, John Lewis has had a tough time during the pandemic, closing stores and stopping dividends, but it’s fighting back. Notably, a new property investment project is an indicator of how the commercial property market is developing.

The quintessentially British group has revealed plans to build 10,000 homes over the next ten years, the vast majority of which it wants to put up on its own land, including on John Lewis sites, above Waitrose supermarkets and in space next to its distribution centres.

The John Lewis project is an example of the emerging build to rent sector, which is underpinned by a greater degree of security and transparency in relation to rent. At the same time, it is a clear sign in the growing potential of the retail-to-residential property sector.

Why investors should look at the retail-to-residential property sector

A recent change to planning laws has allowed property owners to turn retail space into residential units. The move has the potential to be transformative, in particular for ailing high-streets. The continued demand for residential property suggests that John Lewis will be far from alone is using the new law to target residential property development.

The move by John Lewis has been driven in part by the sea change in consumer buying behaviour, with the lockdowns accelerating the take-up of online shopping. While the lifting of restrictions is likely to fuel a revival in in-store shopping, the retail landscape has undergone a fundamental change that won’t be reversed.

The upshot for the commercial property market, aside from the need to change legislation to stimulate investment in high-streets, is growing demand for warehousing and other logistics facilities, in particular those located close to central business districts and transport hubs.

Finance options for commercial property investors

The decision by John Lewis to target growth in the build-to-rent sector and to do it by turning some of their retail space into residential property is a clear signpost for the development of the commercial property market and is likely to act as catalyst, in that other investors are likely to follow suit.

As owners and investors take such steps, it is important that they have access to the right finance facilities. In a marketplace that is still evolving after a seismic shock, and where opportunities are appearing in non-traditional areas, decisiveness, flexibility and speed are critical.

This is why it is important to have a commercial loan and mortgage lender that provides access to all the available funding options, including the services of alternative lenders.

To find out more about A&T Business Associates services for commercial property investors, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.

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