Activity surge sees commercial property sector bounce back

The Uk’s commercial property sector has shown a return to form during the last year, including an impressive turnaround for the retail and office sectors, according to Sirius Property Finance.

Related topics:  Business
Property Reporter
21st January 2022

The latest market analysis by the real estate debt advisory specialists revealed that in 2021, the UK commercial property sector completed 2,789 sales transactions, up 3% on 2020’s total of 2,698. More impressive still is the total value of those transactions which, in 2021, totalled £56m, up 20% on 2020’s total of £46.9m.

Growth being driven by the industrial sector

Much of this growth has been driven by the Industrial property sector - factories, warehouses, distribution units, - with the number of transactions increasing from 699 in 2020 to 892 in 2021, a rise of 28%.

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

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

Office and retail also on the up

What is perhaps more surprising is the increasing health of both the commercial office sector and the commercial retail sector, with both enjoying positive growth in 2021 after a very tough initial year of the pandemic.

Despite the much-reported exodus of office space due to work from home advice, the total number of office transactions actually increased by 3% in 2021. The total value of these transactions also increased 23% to £18.2m.

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

Highest demand for commercial property

The firm also analysed current market demand based on the ratio of commercial property that has already gone under offer or sold subject to contract across Britain. The figures show that on average, 36% of commercial property has already been sold.

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

Kimberley Gates, Head of Corporate Partnerships at Sirius Property Finance, commented: “It’s fair to say that office, retail and leisure facilities became largely obsolete for much of 2020 and so the outlook for the commercial sector was very different to the market boom experienced across the residential space.

"However, we’re now seeing a strong level of market activity return and not only are transactions climbing, so too are commercial real estate values.

"This suggests a real sign of intent from British businesses who are looking to bounce back from pandemic uncertainty while planning and expanding for the future.”

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