The UK commercial real estate market is expected to record a CAGR of approximately 5% during the forecast period (2022-2027).

Real estate has been badly hit by the COVID-19 pandemic with a sharp decline in values across all markets and sectors. Confidence in the UK property market had already been knocked by the uncertainty surrounding Brexit. Although Brexit has been sharply put into perspective, leaving the European Union has not helped the United Kingdom to address severe labor and material shortages, as well as crippling supply chain issues.

Early investment market data for Q1 2022 shows momentum continues to build. Record-high volume in the GBP 100 million (USD 131 million) lot size range so far this year bodes well for a further uptick in volume in 2022. Sectors that have been out of favor for some time, particularly shopping centers, are beginning to show signs of a renaissance. However, rising interest rates and swap rates are a key risk for the cost of finance.

Key Market Trends

Growing Investment in Industrial and Logistics Real Estate in the United Kingdom

Over USD 21.56 billion of industrial assets were traded in 2021, an annual total that stands alone as the strongest year for industrial investment. This exceptional figure is up by 60% on the total achieved in 2020. The sector accounted for 29.0% of all the UK real estate investment activity by value, the largest market share on record in 2021.

Industrial real estate remains the highest conviction asset class for investors, with annualized returns of 38.2% capital growth in the 12-months to December 2021. This has been driven by continued strength in the occupier market, which is driving record rental increases and record-low vacancy.

Some of the largest transactions include Blackstone and Valor’s USD 203.7 million purchase of Gemini Park in Beckton and CBRE GI’s USD 184 million acquisition at Fenny Lock in Milton Keynes in Q4 2021.

Declining Vacancy Rates and Increasing Rents of Office Spaces in London

There was a resurgence in demand in the Greater London & South East office market in 2021, after the weaker take-up recorded in 2020 as a consequence of lockdowns. Take-up reached 3.5 million sq. ft, which reflected a 46% and 12% increase in the take-up recorded in 2020 and 2019, respectively. The transactional activity was only 2% below the pre-COVID-19, illustrating the healthy levels of occupier activity in the market. The Western Sector was the most active geographical region, accounting for 45% of total take-up recorded in 2021.

The market received a confidence boost, with several large corporations committing their long-term future to the region. This included Unilever, ITV, and Intercontinental Hotels Group, which all leased over 50,000 sq. ft in 2021. There were 10 deals recorded over 50,000 sq. ft, which was the highest total since 2018 and the second highest quantum in the last five years. Notable transactions in Q4 2021 included Skanska leasing 67,000 sq. ft at Leavesden Park, Watford, and EY acquiring 26,000 sq. ft at R+, Reading.

Competitive Landscape

The commercial real estate market in the United Kingdom is fragmented due to a low level of market share concentration. The industry is highly competitive. The United Kingdom’s property market is extremely attractive to investors both at the domestic and international levels. Property tech is a growing sector in the country as it is easier to invest, buy, and sell through it than the usual process. Some of the players are Land Securities Group PLC, Segro PLC, British Land, Derwent London, and Hammerson.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

• 1 INTRODUCTION

  • 1.1 Study Assumptions

  • 1.2 Scope of the Study

• 2 RESEARCH METHODOLOGY

• 3 EXECUTIVE SUMMARY

• 4 MARKET INSIGHTS

  • 4.1 Current Economic Scenario and Consumer Sentiment

  • 4.2 Commercial Real Estate Buying Trends - Socioeconomic and Demographic Insights

  • 4.3 Government Initiatives and Regulatory Aspects for Commercial Real Estate Sector

  • 4.4 Insights into Existing and Upcoming Projects

  • 4.5 Insight into Interest Rate Regime for General Economy and Real Estate Lending

  • 4.6 Insights into Rental Yields in Commercial Real Estate Segment

  • 4.7 Insights into Capital Market Penetration and REIT Presence in Commercial Real Estate

  • 4.8 Insights into Public-private Partnerships in Commercial Real Estate

  • 4.9 Insights into Real Estate Tech and Startups Active in Real Estate Segment (Brokerage, Social Media, Facility Management, and Property Management)

  • 4.10 Impact of COVID-19 on the Market

• 5 MARKET DYNAMICS

  • 5.1 Drivers

  • 5.2 Restraints

  • 5.3 Opportunities

  • 5.4 Porter's Five Forces Analysis

• 6 MARKET SEGMENTATION

  • 6.1 By Type

    • 6.1.1 Offices

    • 6.1.2 Retail

    • 6.1.3 Industrial

    • 6.1.4 Logistics

    • 6.1.5 Multi-family

    • 6.1.6 Hospitality

  • 6.2 By Key Cities and Regions

    • 6.2.1 England

    • 6.2.2 Wales

    • 6.2.3 Northern Ireland

    • 6.2.4 Scotland

    • 6.2.5 London (City)

    • 6.2.6 Rest of the United Kingdom

• 7 COMPETITIVE LANDSCAPE

  • 7.1 Market Concentration

  • 7.2 Company Profiles

    • 7.2.1 Developers

      • 7.2.1.1 Land Securities Group PLC
      • 7.2.1.2 Segro PLC
      • 7.2.1.3 British Land
      • 7.2.1.4 Derwent London
      • 7.2.1.5 Hammerson
      • 7.2.1.6 Capital & Counties Properties PLC*

    • 7.2.2 Real Estate Agencies and Trusts

      • 7.2.2.1 Shaftesbury PLC
      • 7.2.2.2 Tritax Big Box Reit PLC
      • 7.2.2.3 Unite Group PLC*

    • 7.2.3 Other Companies (Startups, Associations, etc.)

      • 7.2.3.1 Wayhome
      • 7.2.3.2 AskPorter
      • 7.2.3.3 Landbay
      • 7.2.3.4 Thirdfort
      • 7.2.3.5 RentProfile*

• 8 FUTURE OF THE MARKET AND ANALYST'S RECOMMENDATIONS

• 9 APPENDIX

• 10 DISCLAIMER