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UK Property Market Defies Downturn: CEO Confident
18 Feb
Summary
- Office space demand remains strong with long-term leases.
- Retail centers are recovering, with top locations increasing value.
- Development faces hurdles from costs, planning, and interest rates.
Mark Allan, CEO of property giant Landsec, challenges prevailing narratives about the UK's commercial property market. He reports robust demand for office space, with businesses committing to 15 to 20-year leases, indicating a reversal of post-COVID downsizing. Allan also expresses optimism for retail, noting that major shopping centers are rebounding with increased sales and rents. Retailers are becoming more strategic, focusing on prime locations, which are gaining value due to the scarcity of new developments.
Despite positive trends in office and retail, Allan highlights significant obstacles for large-scale development in the UK. He points to escalating construction costs, inefficient and unpredictable planning processes, and persistently high interest rates as major deterrents to initiating new projects. Furthermore, he criticizes political instability and an "outdated" business rates system for eroding investor confidence and complicating long-term planning efforts.
