Any realistic appraisal of the prospects for commercial property in 2019 should accept this will be another year of uncertainty.

On the political front, Brexit remains unpredictable less than three months before it is due to happen. Lenders to European real estate markets are forced to predict the impact on capital liquidity and occupier demand if the UK leaves the European Union with no trade deal. Meanwhile, technological innovation will continue to change our relationship with the built environment, already highlighted by the malaise on the high street as people shop online.

Against this backdrop, Mat Oakley, head of commercial research at Savills, had some advice for those trying to make sense of the market at a discussion with journalists on the prospects for the UK property market earlier this week.

Co-working, company voluntary arrangements and Brexit have dominated property professionals’ conversations lately, Oakley said, with too little focus on the fundamentals of the real estate market and what customers actually want. Key questions for investors, he said, must always be around how a building aligns with a tenant’s needs and what drives those needs.

In the office space, for example, the popularity of ‘workspace as a service’ is not simply due to the rise of tech companies or Brexit-related insecurity, but speaks to a deeper shift; a rejection of the traditional landlord-tenant relationship in favour of an engagement which treats occupiers as customers. Arguably, said Oakley, commercial property may be the last sector to grasp that customer care is a differentiator.

This argument provides food for thought for real estate lenders in these uncertain times. It suggests the long-term performance of real estate assets is more in their owners’ hands than at the mercy of political, economic and societal headwinds.

Asked about their lending strategies at this late stage of the cycle, many debt providers speak of a heightened focus on lending to the ‘best’ properties and sponsors. It seems there is a growing appreciation of what that means. While location and asset quality are crucial, many owners are waking up to the fact that creating the market’s best product means addressing an historic flaw in how landlords treat tenants.

Creating resilient real estate assets means taking measures to meet the long-term fundamental needs of society. That could be an office building designed with the well-being of staff at its heart, or quality residential aimed towards the needs of a demographic, such as housing for footloose professionals, or for the elderly. Ensuring a building meets sustainability standards is another example of owners meeting their customers’ expectations – both their investors and their occupiers alike.

At the Savills event, Oakley predicted this year will really test the workspace as a service model. By channelling lending to those sponsors that understand this, debt providers will also demonstrate a greater awareness of the value of pleasing the user of a property and not just its owner.

Email the author: daniel.c@peimedia.com