Industrial sector driving commercial market back to health

Far more investors purchased factories, warehouses and distribution units in 2021, analysis from real estate debt advisory specialists, Sirius Property Finance has found.

There were 892 transactions in 2021, 28% more than the 699 recorded in 2020.

Overall, commercial activity was relatively flat year-on-year. There were 2,789 sales in 2021, 3% more than 2020’s total of 2,698.

The value of those transactions rose by 20% from £46.9 million to £56 million, indicating that there were more high-cost deals.

Kimberley Gates, head of corporate partnerships at Sirius Property Finance, said: “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.”

The health of both the commercial office sector and the commercial retail sector improved. 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 by 23% to £18.2 million.

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.

Sirius Property Finance 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 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%).

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