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Commercial Property Market Trends and Outlook

With immense changes happening across commercial real estate markets worldwide, it’s challenging to keep tabs on the latest trends and what to expect in the coming months. 2020 was difficult and unexpected for the entire property market, but things weren’t as harmful as many expected them to be.

So, what do you need to know about office spaces, industrial buildings, and more as we enter this year of recovery?

Get a glimpse into the current commercial real estate market trends both at home and worldwide so that you can adjust your perspective as needed.

UK: A Glimpse At Commercial Real Estate Segments

For a quick understanding of what’s going on with the commercial real estate market in the UK, examining a few specific segments can be beneficial.

Commercial Retail Property: Shortened Decline

As the UK moves towards full reopening, retail and dining are starting to pick up speed again, though it will take some time before anything reaches pre-COVID levels. Normalisation of these segments, however, is good for the general health of the economy.

As business rates relief and commercial eviction bans end, it’s possible that a shift in the commercial market will be seen. Buildings housing businesses that did not make it through the pandemic may come onto the market quickly, and this could lead to new opportunities for investors.

Industrial Properties Keep Growing

While the growth of industrial leasing has slowed compared to 2020, the overall pattern for leasing in these segments shows potential for atypically high numbers. This is reflected in the greater number of commercial property insurance policies purchased compared to the previous year.

UK logistics and industrial leasing has been utilised even more extensively by retailers, parcel delivery, and 3PLs than ever before in the last year. Additionally, film studios are utilising these spaces in growing numbers each year.

Though office spaces are still available in many areas, some regions have seen office spaces begin conversion into logistic and industrial spaces instead. Property managers in some commercial segments are seeing the benefit of converting to faster leasing properties, but this is largely restricted to areas outside of metros.

Commercial property

Office Spaces Slowly Coming Back To Life

Office space vacancies in London hit nearly 7% during the height of the pandemic, and it remains relatively low when compared to the global market. However, tenants are starting to look to leasing space across the UK as unemployment falls, and things keep reopening. Office spaces are expected to be leased at slower rates than pre-2020, but this could change rapidly.

As property owners look to have their spaces filled with tenants again, it’s important to remember to keep an eye on the types of letters you look for. Toronto Property Management firm Buttonwood.ca recommends the following: “Attracting high-profile/quality tenants is key to lower costs over the long run. It can be less expensive and thus more profitable to maintain an existing renter than to find a new one.”

Filling spaces quickly is important to your business, but you might lose more long-term by renting to those that aren’t financially prepared to be in your space. Keep that in mind as you look for tenants.

Looking Towards Worldwide Trends

Global commercial markets often have large influences on each other, and it can be beneficial to see what is happening around the world to get a better idea of what might be coming up next.

Following the way that countries worldwide have been affected by and handled COVID-19 in very different ways, the commercial markets are also seeing a lot of variation. Let’s take a look.

Recovering Economies

Larger markets around the world continue to show stronger recovery as these markets were able to stand up to more volatility. Still, it’s possible to see that long-term, commercial real estate markets are likely to have a strong recovery.

Right now, much of the global economy is still restricted by cross-border restrictions and similar delays in capital flow. As some transactions are able to open up, opportunistic interests are showing up in the commercial real estate sector once again. Things are stabilising, and that stabilisation will see a return to more international transactions.

This guest post was provided by Buttonwood Property Management. The opinions expressed by the guest writer above and those providing comments are theirs alone, and do not necessarily reflect the opinions of SevenCapital or any employee thereof. SevenCapital is not responsible for the accuracy of any of the information supplied by the guest writer.

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