Owner-occupiers have been driving the commercial property market, according to the latest Commercial Property Demand Index from Rangewell.
The research found steady investor appetite in Q2, but it was the high level of owner-occupied commercial mortgage activity that kept the market moving.
Business owners have been switching from renting to buying to cut costs.
The main reasons for this shift were lower monthly mortgage payments compared to rents and the benefit of gaining more control over their premises.
The research found that retail properties made up 27.8% of total demand during Q2, offices were at 27.3%, and industrial and warehouse units at 26.2%.
Demand across the market was largely unchanged from Q1.
Leisure and hospitality was the only segment to see growth, rising by 0.7%.
Specialist sub-sectors such as care, dental, and children’s day nurseries also saw more movement towards owner-occupation.
Additionally, Rangewell reported a rise in enquiries and completions for owner-occupied commercial mortgages as established businesses looked to secure their future and avoid increasing rents.
The trend covered all types of buildings, from retail units and warehouses to offices and industrial spaces.
Alasdair McPherson, commercial property expert at Rangewell, said: “When business owners realise that mortgage payments can be up to 37% less than rental payments – and they’re building equity value in their property at the same time, the case for buying becomes obvious.
“It’s astonishing how often an owner-occupier can buy their freehold property and still pay less each month than they do leasing the same building.
“The commercial market remains resilient, with retail and office properties proving most attractive to buyers.”
McPherson added: “But what’s really fuelling activity beneath the surface is the increasing number of business owners looking to purchase their own premises.
“With commercial mortgages tailored for owner-occupiers, many businesses are making strategic decisions to invest in their future, take control of their location, and build long-term value.
“From our perspective, the commercial owner-occupied sector has never been busier and lenders are lining up to grow their share in what’s fast becoming the most competitive segment in the sector.”
