Milan: One year after lockdown

Exactly a year ago today, Italy became the first European country to enter a nationwide lockdown, in an effort to stem the spread of the coronavirus.

One year on, Office Head in Milan, Giacomo Spinelli, takes a closer look at the impact that the pandemic has had on the local market and identifies where potential investment opportunities can be found…

Following the outbreak of Covid-19, Italy was the first country in Europe to go into lockdown and to begin with, we thought that it was a temporary, precautionary measure.

One year on, it’s clear that life will never return to ‘normal’ but with Italy’s vaccination program underway, we can start to assess the changes that are happening now and look ahead at future investment opportunities.

The real impact that the pandemic has had on the local economy is still to be determined but the changes in the market are very apparent. The data centre and logistics industries continue to grow at a fast pace, and this is something that we’ve experienced first-hand at Hyphen through increased demand from clients to deliver these kinds of projects. The Italian market still has ample margins of growth for these large-scale facilities and can learn a lot from its neighbours in Germany and France about how to capitalise on emerging market opportunities.

The retail industry is also starting to pick up in Milan and its fate no longer seems as ‘doomed’ as people may have you believe. It’s true that this sector has suffered but as I look out of my window, it’s mostly the mid-market retailers who have taken the hit. The outlook for budget and luxury retailers remains positive.

What’s still a bit of a mystery is what will happen to the workplace sector. Although a lot of people are still working from home, I am confident that this is only temporary and employees will most likely return to the office (albeit on a part-time basis). As humans, we thrive off social interaction so I can’t see this disappearing for good. It is likely that the city’s more central locations will still be attractive for large companies – creating a kind of business hub. It is the smaller office buildings, dotted around the city, that will likely become vacant.

Surprisingly, the residential sector has remained fairly stable and although short-term lets have struggled due to the lack of students and an increase in remote working, the luxury residential market has seen some growth (possibly because there is now more prime real estate available).

So, what lessons can Milan learn from these shifts in the market?

If lockdown has taught the city of Milan anything, it’s not to be reliant on one sector. For instance, pre-Covid, the hospitality sector in Milan accounted for a large percentage of the city’s income but as this was traditionally linked to fairs and business travel, it is now operating at almost zero.

Milan is still attractive for the same reasons that it was before the crisis: its public infrastructure, international culture and the promise of the 2026 Winter Olympics.

As the economic hub of Italy, it’s up to Milan to look at its European counterparts and focus on growing its business in markets that are booming and it would be fair to say that it can take a leaf out of Hyphen’s book in this respect. As an international architecture firm, Hyphen was able to adapt to changes in the market and explore opportunities across different sectors and locations, and it is this global and open-minded approach that will be needed for Milan to continue to thrive.