Post Olympic prospects look positive for the UK economy
After the great success of the Olympics and the feel good factor that went with it, weaker economic data has brought the UK back down to earth. What is surprising; however, is actually how well some parts of the UK economy are doing.
Employment growth in particular is surprisingly strong. The consensus at the start of this year was for a year of falling employment.
What actually happened was a one per cent plus increase with an even bigger increase in the sectors that drive the demand for offices (such as technology, media and business services and public).
From a property perspective, it is clear that increased employment has yet to manifest itself in widespread increases in occupier demand. This is partly due to the skewed regional pattern of growth – what we have seen so far has been largely London and the South East centric and, in no small way, due to companies’ uncertainty about future prospects, making them focus on cost control rather than committing to new space.
Still, an upwards trend in office-based employment has been a very welcome development in the UK. With export markets recovering and consumer demands showing steady gains, the prospects are for more jobs growth in 2013 and the more growth continues, the more it will spread to areas outside of the south east region and outside of prime areas, although widespread office rental growth may have to wait until 2014.
Retail sales have now been on an upwards path for more than a year and look set to continue as long as jobs growth continues. Multi-channel is the key phrase in retail though.
Internet sales have creamed off the bulk of the increase in sales, and retailers that have embraced the internet have done well, while others have foundered.
On the retail property side, polarisation is the order of the day. Prime central London and good quality regional centres have prospered while many smaller and secondary centres are struggling.
Stronger centres offering destination shopping and stronger retailers who can invest in new technology will continue to dominate as the economy recovers.