The "flight to quality and security" among commercial property investors will continue next year, one real estate expert has claimed. Partner in the commercial real estate team at Knight Frank Darren Yates explained the focus will very much be on prime assets, with investors seeking properties in the best locations and with reliable tenants. He commented: "The quality of the tenants will become increasingly important because it is all about maintaining that income stream while the wider market is more volatile." Mr Yates added people in the sector are likely to shy away from any assets that could be considered more risky, such as those in secondary business park locations.
Earlier this month, research published by Jones Lang LaSalle revealed that there has been a "seismic shift" in the way landlords and occupiers in the commercial sector are developing relationships. Managing director of France and Southern Europe at the firm Benoit du Passage noted that tenants are trying to get as much out of their deals as possible. "Occupiers recognise they are in a stronger negotiating position than ever before," he asserted. Mr du Passage went on to predict that this change in the balance of tenant-owner relations will continue for the next decade.
Director of Europe, the Middle East and Africa research at the organisation Bill Page explained that this could be a positive change for tenants, developers and investors. "Flexible, long-term partnerships with developers and out-sourced service providers will lead to better outcomes for both parties, especially in the absence of debt funding," he stated. Jones Lang LaSalle has recorded a fall in the average length of a tenancy for commercial property in major European markets. For example, in central London, the typical length of a commercial office lease has fallen from 12.7 years in 2001 to 7.9 years in 2011. According to the firm's research, this is expected to slide to five years across western European markets by 2020.