What: During lockdown, U.K. businesses were rethinking commercial spaces and preparing for a surge in post-pandemic demand.

Why is it important: London high streets’ predicted shift to smaller, hyper-local and new commercial formats should be observed as an example of what might happen in capitals in the future.

The British economy is estimated to grow by 4% this year — and by 7.3% in 2022 — and much of that growth will be powered by British tourists, returning office workers, and the international rich who already own homes in the U.K., and are planning to spend their summer here.

Interestingly, Matt Farrell, managing director of Trophaeum, said that his company has not lost any retail tenants over the past 12 months, and it has been seeing demand from high-end restaurants seeking space.

Grosvenor Britain & Ireland is landlord to about 500 retailers. The company is willing to “selectively invest in tenants to help them pivot their businesses and grow post-pandemic”, showing confidence in the future of physical retail.

Anita Balchandani, partner at McKinsey, said that fashion and luxury sales will recover more quickly in the U.K. than in Europe due to the country’s rapid vaccine rollout. Balchandani believes that physical stores that know how to create a “relevant experience” will thrive. She added that “hyper-local” shopping will also be “a very dynamic and interesting space”.

Diane Wehrle, marketing and insights director at Springboard Research, believes that smaller high streets will benefit from the new hybrid working model that’s emerging, with people engaging more with their local neighbourhoods on the days they spend at home. She believes that once rental rates are “rebalanced” in traditional retail neighbourhoods, there will be ample room for new commercial formats, experiential and community spaces.

U.K. Businesses Lay Groundwork for Recovery