Rightmove’s quarterly commercial insights tracker showed demand for commercial property investments rose by 28% in Q4 2024 compared to the previous year.
The East Midlands and London saw the most significant rise in investment interest.
The industrial sector led this surge, with demand 72% higher than in Q4 2023, followed by the office sector with a 57% increase.
Demand in the industrial sector also grew in leasing, up 31% from the previous year.
The office sector experienced an 11% jump in leasing inquiries, while supply rose by 2%.
Reaction:
Michael Sears, NAEA Propertymark commercial advisory panel member:
“It is encouraging to see that the Bank of England’s interest rate cut has resulted in an increase in demand for commercial property, especially at a time when the retail and office sectors are struggling in general.
“It is clear that there is an appetite among investors for opportunities for industrial sites, and Propertymark’s own Commercial Outlook found that 40 per cent of members forecast an increase in supply in the industrial sector.
“Hopefully, as the base rate continues to decrease in the long-term, it will lead to a thriving commercial property sector for years to come.”
Andy Miles, marketing director of commercial real estate at Rightmove:
“Lowering interest rates have further fuelled the attractiveness to invest in commercial property after a couple of tough years for the sector.
“The industrial sector continues to lead the way, with the growth in e-commerce and online shopping turbocharging demand to both invest in and lease industrial space.”
Ian Humphreys, founder & CEO at Brickflow:
“We’re still near the beginning of a global rate-cutting cycle, which is bringing more and more investors back to the commercial property market.
“As investors look to diversify their portfolio or take strategic views based on planning reforms, commercial property investments are again becoming a popular choice.
“With the future of the office market still in transition, and retail assets declining in popularity, investors continue to be drawn to the industrial sector, as businesses continue to seek out bigger and modern warehouse space.
“There is also still a major shortage of good quality commercial space that is energy efficient, creating opportunities for the value-add investors.
“For example, in the office sector, top quality, modern office space is still in high demand from companies, particularly if they are trying to encourage employees to spend more time there.”
Christian Smith, director at Savills:
“We saw a relatively strong and better than expected end to the year, despite the market challenges which remained throughout 2024.
“We saw enquiry numbers increase from start of Q4 right up until Christmas, which bodes well for the start of 2025 and we wait to see if the momentum continues.
“In the industrial sector, we’re seeing good take up of larger distribution facilities over 400,000 square feet, and we’re also seeing healthy levels of take up at around 100,000-200,000 square feet.
“The outlook for 2025 is fairly positive, with more stability and improvements in wider macro-economic factors.
“Beneath the headline figures for industrial, the warehouses and logistics sector continues to be the strongest performer compared to the office and retail sectors and we’re also seeing surprising resilience in the manufacturing market.
“The shift from traditional retail to online is continuing to grow, driving ongoing demand for warehouse space.
“Businesses are increasingly looking for more comfortable spaces for their employees, leading to many companies upgrading to more modern commercial units.
“We’re also seeing energy efficiency trends play out, with many companies also looking for more up-to-date space which is more insulated and efficient.”
