Commercial property

Rising activity sees commercial real estate sector rebound

The UK commercial property sector has shown a return to form over the past year, including an impressive turnaround for the retail and office sectors, according to Sirius Property Finance.

The latest market analysis from the property debt advice specialists revealed that in 2021 the UK commercial property sector completed 2,789 sales transactions, up 3% from the total of 2,698 in 2020. Even more impressive is the total value of these deals which in 2021 stood at £56m, up 20% from the total of £46.9m in 2020.

Growth driven by the industrial sector

Much of this growth was driven by the industrial property sector – factories, warehouses, distribution units, – with the number of transactions increasing from 699 in 2020 to 892 in 2021, an increase of 28%.

At the same time, the total value of industrial trade transactions increased by 57%, from £10.2m in 2020 to £16m in 2021.

This industrial growth is perhaps unsurprising given the surge in online shopping due to the pandemic, with an online boom necessitating the industrial infrastructure to facilitate the storage and distribution of goods.

Offices and shops also on the rise

Perhaps more surprising is the growing health of the commercial office sector and the retail sector, both enjoying positive growth in 2021 after a very difficult first year of the pandemic.

Despite the much-publicized exodus of office space due to working from home, the total number of office transactions actually increased by 3% in 2021. The total value of these transactions also increased by 23% to 18, £2 million.

As for retail and leisure, another widely reported victim of the pandemic, transactions increased by 2% in 2021, with the total value of these transactions increasing by 31% last year.

Highest demand for commercial real estate

The company also analyzed current market demand based on the ratio of commercial properties already on offer or sold under contract across Britain. Figures show that on average 36% of commercial properties have already been sold.

The highest regional demand is in the East of England (43%), followed by the South West (41%), South East (40%) and East Midlands (38%). The lowest demand levels in the country are currently in the North East (27%), Yorkshire & Humber (28%) and London (30%).

Kimberley Gates, Head of Corporate Partnerships at Sirius Property Finance, commented: “It is fair to say that offices, retail and leisure facilities have become largely obsolete for much of 2020 and the outlook for the commercial sector was therefore very different from the market boom experienced in the residential space.

“However, we are now seeing a strong return to activity in the market and not only transactions are increasing, but also commercial property values.

“It suggests a real sign of intent from UK businesses looking to recover from pandemic-related uncertainty while planning and growing for the future.”