Data Suggests Commercial Property Sector ‘Bounced Back’

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02 February 2022

Market analysis suggests that UK’s commercial property sector has demonstrated a bounce back in the last year, with even the supposedly struggling retail and office sectors showing strong signs of recovery.

Data from Propertydata.com and Rightmove, analysed by Sirius Property Finance, shows that in 2021, the UK commercial property sector completed 2,789 sales transactions, up 3 per cent on 2020’s total of 2,698.

The value of those transactions in 2021, totalled £56 million, up 20 per cent on 2020’s total of £46.9 million. 

Head of Corporate Partnerships at Sirius Property Finance, Kimberley Gates, 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.”

Industrial Property Boom

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 per cent. 

At the same time, the total value of industrial commercial transactions has increased by 57 per cent, from £10.2 million in 2020, to £16 million 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 Increase

Both the commercial office sector and the commercial retail sector also enjoyed 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 per cent in 2021. The total value of these transactions also increased 23 per cent to £18.2 million. 

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

Highest Demand for Commercial Property

Sirius Property Finance 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 per cent of commercial property has already been sold.  

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

Picture: a photograph of an open plan office area. Image Credit: Unsplash

Article written by Ella Tansley | Published 02 February 2022

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