Out with the old: Obsolescence has advantages for investors
Obsolescence is a powerful dynamic. Growing old — whether quickly or slowly, it still happens — can take you to places where you might not otherwise choose to go. Like anything, real estate wears out over time and needs renewing or replacing. Businesses change, people change, tastes change; and the use to which land and buildings are put also changes.
We see the results of real estate obsolescence everywhere. 2 percent of commercial property stock is replaced every year with shiny new, state-of-the-art developments that both meet modern occupier requirements and embrace the latest environmental and sustainability standards. Empty offices are converted into multifamily residential accommodation, helping the supply-demand situation for much-wanted city-centre homes and exacerbating that for offices, but as a by-product also helping enormously, potentially, with high office vacancy rates and low rental growth prospects. Lacklustre shopping centres in secondary and tertiary l