How could new Technology affect Commercial Property Prices?

There are plenty of ways in which improvements in IT are making life a lot easier for property investors.

Cloud computing allows them to access vital documents or software from any location across the world. Advances in the mobile web speeds allow them to get work done as quickly as they would be able to from the comfort of their office. Improvements in property management software make it easier to access and amend certain data with ease.

Yet, there is one indirect side-effect that could eclipse everything else in the eyes of property investors and that is the long-term effect that technology could have on commercial property prices.

How could the remote working trend affect commercial property prices?

The main advances in IT over the last few years focus on the ability to complete tasks from any location. This has resulted in a growth in remote workers across the world, which both employers and employees seem to agree is a good thing.

Employees are able to eliminate their daily commute, work more flexible hours and enjoy an improved work/life balance. Employers can enjoy the fruits of a happier, more productive workforce whilst not having to spend as much on their own office facilities. Some may decide they need less office space or no office space to all. That’s where property investors could be affected. A lower demand for office space in the future could potentially send their values crashing down in the future.

It’s not just the office space market which could potentially be affected. Much has already been made of how the growth of online shopping is affecting demand for retail space. Almost every major retailer is has placed more focus on e-commerce in recent years. This is simply because more and more shoppers are buying goods online every year. Shop vacancy rates are increasing across Europe all the time because the demand for retail space is not what is used to be and this is only likely to continue as e-commerce technology improves.

What does this mean for property investors?

There’s no need for property investors to panic just yet, but it’s certainly a long-term trend worth monitoring. The ‘remote working’ trend is one which is evolving slowly but surely. It goes against office culture in many firms and there are still plenty of corporations who remain unconvinced by the security and reliability of the cloud. How dramatically adoption of the cloud impacts the need for office space remains to be seen.

The impact of technology on retail space is already underway and has had an effect on property prices in a number of markets. Politicians are keen to find a way to halt this decline of the traditional high street though, so all is definitely not lost for the retail market. Prime retail space remains a solid investment across many markets where demand continues to increase.

However, those who are concerned about the future of these markets could certainly start exploring other avenues. The industrial and warehouse sector is performing very well in certain regions, for example.

Of course, there are plenty of trends which could affect the future of property prices – but the gradual shift to remote working is certainly one of them.