The decline of the high street - which has been accelerated by the Covid-19 pandemic - is forcing commercial investors to shift their attention to the residential market.
This is according to apropos, which says commercial investors can benefit from the better returns and greater financial stability on offer in the residential sector.
A return to a busy high street after the worst of the pandemic is unlikely, the firm says, as its financial structure is based on an 'outdated model of town and city development'.
The decline of the high street was already in full swing before March due to expensive commercial rents, buyers going online for purchases and the decline of the casual dining sector.
apropos says that the shift from commercial to residential property investment has already been taking place, demonstrated by the growth of Build to Rent and the major shift made by commercial firms such as Legal & General.
"While many more people will eventually return to traditional working methods and travelling to city and town centres there does seem to have been a more significant, and perhaps permanent, change in consumer consumption patterns which could have a major long term impact on the commercial property sector," says David Alexander, joint managing director of property management platform apropos.
He suggests that the impressive bounceback experienced by the residential sector as lockdown restrictions were eased is down to pent-up demand being released and people placing more importance on their homes.
"All those months of lockdown seem to have made owners and renters more appreciative of the need to have a great place to live in," says Alexander.
"The result has been a boom in property sales and an unprecedented increase in activity in the private rented sector as people prioritise home life above everything else."
According to the lettings expert, this shift is likely to result in commercial investors pursuing the returns and stability on offer in the residential market.
"I believe that we will see a shift in sentiment toward the residential market over the next few years as uncertainty and instability takes its toll on commercial sector sentiment," he concludes.