A heatmap of due diligence activity in Orbital Witness through the UK lockdown period.
Orbital Witness is used by hundreds of lawyers across the country to carry out due diligence across the full spectrum of transactional commercial real estate work. We’ve taken a look at how our platform has been used before, during, and after the recent lockdown period in the UK.
Why? We wanted to understand trends across the different types of work commercial real estate lawyers undertake and provide our clients insight into the bigger picture in terms of how new instructions were affected by COVID-19 and the resulting lockdown.
Here is what we learned:
- Overall, the total amount of new transactional work fell by roughly 40%. The average number of new projects taken on per lawyer each month fell from 2.2 before lockdown began in March to 1.3 by May. June showed some positive signs of recovery, with lawyers taking on an average of 1.6 new projects.
Acquisitions and Disposals
- New acquisitions and disposals made up 46% of this work in the 6 week period before lockdown began. This fell to 39% in March and April, and to 33% in May before partially recovering to 39% in June. A fairly sharp drop but perhaps not as severe as expected by many.
Asset Management and Lease Renewals
- Before lockdown, asset management and lease renewals constituted 27% of work undertaken. This increased to 36% in the latter half of April and into May. This is consistent with the increase in advisory work which many firms reported as landlords and tenants looked to renegotiate leases for spaces that tenants were unable to occupy during the lockdown period.
Finance and Lending
- New finance and lending activity, including refinance and restructuring, more than doubled as a proportion of work carried out by our customers, from 8% in Februrary and March, growing to 13% in April, and rising to as high as 20% in May. The likely explanation for this trend is the surge of businesses looking to sure-up their finances during the period of COVID-induced economic uncertainty with short term loans secured against their property assets.
Investment and Development
- New investment and development work was perhaps the most surprising result revealed in the data. Prior to lockdown, these types of deals constituted 19% of all new work undertaken by law firms. Whilst we saw a significant drop-off from the start of lockdown through to the latter half of April, down to just 10%, the data revealed that new investment and development accounted for 23% of work as early as May and 24% in June. This is surprising given the uncertainty in the market. One possible explanation is a spike in activity from strategic investors looking to capitalise on a distressed market.
In summary, the negative impact of lockdown on new transactional work was felt across the board with acquisitions, disposals, investment, and development work suffering the most. Commercial real estate lawyers spent a greater proportion of their time instructed on finance, refinance, asset management and lease renewal work. However, June showed some positive signs of recovery and a rebalancing of the transactional workload as restrictions started to ease.
We’ll be discussing the future of commercial real estate with industry leaders from Clifford Chance, Investec, Lockton Companies and JLL on Thursday 23rd July. Secure your seat at the virtual table now.
This data is compiled from an analysis of new projects initiated by Orbital Witness users during the period 1st February 2020 – 30th June 2020. It does not include commercial property litigation.
Orbital Witness helps leading law firms significantly accelerate their diligence process, identify issues and improve turnaround times for their clients across the full spectrum of commercial real estate work. For more information please reach out to the team.