It was a sorry sight. A redundant fleet of no fewer than eight cars belonging to the estate agency firm Foxtons were photographed last week parked up near Hampstead Heath. Whether the cars were parked because there were not enough potential buyers to be ferried around or due to simple parking logistics, the image served as an ominous omen for the property market.
And things in the commercial property market aren’t looking much better. A report released by the Royal Institution of Chartered Surveyors (RICS) yesterday showed demand for commercial property has fallen to its lowest level in more than a decade. The outlook for retail property was the bleakest, with the industrial and office markets trailing not too far behind.
The RICS survey also measures the gap between the proportion of its members reporting a fall in demand for commercial property and those reporting a rise. The gap between members viewing the glass as half empty and those who see it as half full now stands at 50%.
The findings have simply been explained by the RICS as a result of slowing business expansion due to the economic downturn. While of course this is bound to be playing a part, there are other more positive reasons for the results.
Firstly, businesses are becoming increasingly savvy as to how they work and many are embracing flexible working in one guise or another. A recent BT Business survey found that 74% of UK small and medium sized businesses are operating some form of home working for example. So is it possible that rather than sounding the death knell for business, this survey is a sign that companies are becoming cleverer about the way they use space in an effort to reduce cost, employee inconvenience and their carbon footprint.
Secondly, while sales on the high street have been declining, online shopping has continued to rise in popularity. Just take a look at asos.com where profits soared by 90% in the last quarter, the clearest sign yet that shoppers are shunning the high street for the internet. ‘Pure’ web companies such as Parkatmyhouse.com founded by Anthony Eskinazi can be run like his business is, by one person from his house.
And lastly, a downturn is often seen as a chance to separate the men from the boys, in business terms. One company which is continuing to thrive despite deriving the bulk of its revenue from high street sales is shirt-maker TM Lewin which yesterday reported a 16% rise in sales, driven largely by 11 new stores opening in the past 12 months. And with 14 new stores planned for the forthcoming year, this is one company set to defy the gloom and doom of both the high street and the RICS survey.