2023 has been a challenging year for commercial real estate. Rising interest rates have impacted appetite from investors, the result being that activity levels have been noticeably lower than in recent years.
Some experts are already forecasting base rate cuts in the second half of next year, which if correct means we may see more competitive pricing and a boost to interest in investing in commercial assets.
However, there will likely remain real challenges for borrowers in certain sectors looking to raise the funds they need.
In areas like healthcare, the caution of lenders who don’t sufficiently understand the needs of clients in this industry means they may continue to be overlooked.
As we approach the new year, this emphasises the need for brokers to identify the lenders who are genuinely committed to supporting these business sectors.
Innovation will be crucial across business lending in 2024. While the government has rowed back on some of its green pledges, this still seems the likely direction of travel in future.
As a result, lenders will need to think creatively about how they can support business borrowers in improving their own green credentials.
Finally, there is the question of politics. With a general election on the horizon, there is the temptation for the incumbent government to focus on short-term issues, which may prove vote winners, as opposed to tackling more long-term, systemic challenges.
Equally, there will be businesses who adopt a ‘wait and see’ approach to their own activities until they have a better idea of the priorities of the next government.
Tom Renwick is head of business banking at Atom bank
