Commercial Property Sales Data Shows 'It's a Buyer's Market'

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28 March 2023

A survey of UK commercial estate agents shows that commercial property sales price per square foot are set to fall by 1.6 per cent, as the market shows signs of recovery.

The office market is forecast to see the greatest fall in sales values over the next quarter, with prices per square foot predicted to fall by 2.7 per cent. This is the sharpest fall across all four sectors analysed (office, retail, industrial and leisure).

Around a quarter of respondents believe that office sales prices could come down by over 5 per cent over the period.

Office rents are expected to see some growth, and while they are forecast to drop by 0.4 per cent, this is a 1 per cent recovery on the previous quarter (-1.4 per cent in Q1 2023). This is due to demand for high quality (Cat A), flexible and collaborative spaces, which are more limited in supply and could push rents up, according to respondents.

The data was gathered by Robert Irving Burns (RIB), an independent real estate services company, who spoke to around 250 commercial agents in February 2023.

"With the supply of property coming onto the market expected to remain high, up 2.6 per cent in Q2, rents are recovering and sales values remain low, it continues to be a buyers’ market for those with access to capital. This is particularly pertinent across the retail and leisure sectors, where high yields means they are less affected by spiking interest rates in relative terms.”

–Antony Antoniou

CEO, Robert Irving Burns 

Industrial Sector Continues to Lead Recovery

The industrial sales price per square foot is forecast to drop by just 0.8 per cent in Q2, making it the best performing sector in terms of sales price and significantly improved from the previous forecast (a predicted drop of 2.7 per cent in Q1).

Antony Antoniou, CEO of Robert Irving Burns said: “While it is far from plain sailing ahead, the outlook is decidedly more positive that the previous quarter forecast. There is consensus among economists that inflation will halve to around 5 per cent by the end of 2023, which will help to ease both the cost of living crisis and business appetite for certain capital investments.

“...Our forecast has seen rent expectations in Industrial move into the black (up 0.1 per cent) and rents overall across commercial expected to be down just 0.4 per cent. Sales values will take longer to recover and are expected to reduce further by 1.6 per cent in Q2, with Offices seeing the sharpest fall, down 2.7 per cent.

"With the supply of property coming onto the market expected to remain high, up 2.6 per cent in Q2, rents are recovering and sales values remain low, it continues to be a buyers’ market for those with access to capital. This is particularly pertinent across the retail and leisure sectors, where high yields means they are less affected by spiking interest rates in relative terms.”

You can access the full report here.

Picture: a photograph of a tall building taken from above, where an office space can be viewed through a window. Image Credit: Unsplash

Article written by Ella Tansley | Published 28 March 2023

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