It looks like the UK’s commercial property market is starting to warm up again. Rightmove’s latest Quarterly Commercial Insights Tracker shows that demand for commercial properties is 11% higher than this time last year – the biggest jump since 2021.
Let’s look into what’s behind this surge and why now could be an ideal time to consider commercial property investment.
What’s driving the demand for commercial property?
One of the main reasons behind the uptick in demand is a recent change to interest rates. In August, the Bank of England cut the Bank Rate for the first time in four years, and it also dropped again at the start of November, marking the start of a potential interest rate-cutting cycle. Lower borrowing costs mean it’s now cheaper for investors to finance property purchases, making commercial property an even more attractive investment.
For much of the past few years, rising interest rates made borrowing more expensive. But with rates beginning to ease, investors are finally stepping back into the market.
Why industrial properties are so in demand
Demand for industrial properties jumped by 34% compared to the same period last year. Industrial properties such as warehouses, logistics centres, and storage spaces have become essential as e-commerce and online shopping continue to grow.
As businesses prioritise efficient logistics and storage solutions, industrial spaces offer long-term value. This reliability makes them a favourite among investors who want an asset that can withstand market ups and downs.
Overall commercial growth
It’s not just industrial spaces that are seeing a boost – Rightmove’s data shows increased demand across all types of commercial property. This reflects a growing confidence in the sector and a recognition that each type has unique advantages. Demand for offices increased by 28% in the last three months compared with Q3 2023, while the equivalent figure for leisure was 14%, and retail saw a 7% increase in demand.
As companies continue to adopt hybrid work models, there’s still a steady demand for flexible office spaces that can adjust to businesses’ changing needs. The retail sector is also making a gradual comeback as in-person shopping stabilises.
Why now might be a smart time to invest
The 11% boost in overall demand for commercial property shows that investor interest is definitely back. With the Bank of England interest rate now on a downward trend, financing costs are more favourable, meaning potential returns on commercial property could be higher. Rightmove’s data hints that the market is gathering momentum, making it a great time to think about your next move in commercial property investment.