Retail investment demand bounced back in the last quarter after the Bank of England cut interest rates for the second time this year, research from Rightmove found.
Demand to invest in the retail sector was up by 35% compared to the same three-month period last year, based on enquiries to commercial agents.
High-street retail investment demand was up by 56%, the highest level since 2021.
This marked a turnaround from a year ago, when demand for retail investment was down by 15% year-on-year.
Overall demand for commercial property investment was up by 20% compared to Q2 2023.
Supply of retail properties was down by 4% compared to last year and fell steadily from the start of 2024.
Demand from businesses to lease retail space also went up by 10% compared to last year, showing more interest in physical shops even as online shopping grew.
Investment demand in the office sector also picked up, up by 65% compared to a year ago.
At this time last year, this trend was down by 13%.
Demand from businesses to lease office space was up by 12% year-on-year, with demand in London up by 14%.
In Westminster and the City of London, demand to lease office space went up by 29% and 21% respectively.
The industrial sector recorded the biggest rise, with demand to invest in industrial property more than doubling, up by 105% compared to the same period last year.
Demand to lease industrial space was up by 41%.
Andy Miles, managing director of commercial real estate at Rightmove, said: “The growth of the industrial sector has been one of the main stories so far this year, but we can see a resurgence to invest in retail and office space too.
“Rate cuts are helping investment into commercial property, and after a period of decline it appears that retail and office spaces are becoming more attractive to invest in.”
John Mitchell, managing director at Christie Finance, said: “Bank of England Base Rate has fallen as expected over the past 12 months and general consensus is that we’ll see further reductions this year.
“The reduction in Base Rate is much welcomed and coupled with a narrowing of interest rate margins, the overall cost of borrowing continues to fall making investment more attractive.
“We continue to see strong levels of demand from investors across a broad spectrum of asset classes with recent transactions spanning the leisure and hospitality, retail and student accommodation sectors.”
Michael Sears, commercial advisory panel board member at NAEA Propertymark, said: “It is positive to see a rejuvenated appetite regarding investment within the retail and office space sectors, especially considering habits have shifted significantly in recent years.
“Online commerce fundamentally changed how people shop in many cases, and the pandemic accelerated the home working revolution.
“However, these figures are the highest they have been since 2021 and show that there is still a healthy desire for high-quality retail space across the UK and that many employers are also finding a new balance for their office space requirements that complements hybrid working arrangements with their colleagues.”
Sears added: “These factors added together are a positive sign of a high street resurgence in many regions.”
