Commercial property investment takes a beating

Market analysis by Sirius Property Finance, a debt advisory firm, reveals that commercial property transactions are down 67 per cent while total transaction values have fallen by 73 per cent. 

Sirius Property Finance has looked at the volume, total value, and resulting average value of commercial property transactions in the UK over the last six months, and compared the numbers to those from the six months prior. 

The data reveals a struggling commercial sector with just 281 transitions in the past six months marking a 67 per cent drop compared to the previous six months. 

Office space transactions have seen the greatest decline, falling by 75 per cent. Retail and leisure transactions are down 68 per cent, and industrial transactions have fallen by 57 per cent. 

The total value of commercial transactions in the past six months stands at £3.7 billion which is 73 per cent below the previous six months. 

The total value of office transactions is down 85 per cent, industrial is down 67 per cent, and retail and industrial is down 67 per cent. 

But just as the picture is starting to look terribly bleak for the commercial sector, a silver lining appears when analysing the average value of each individual transaction. 

In the past six months, the average commercial transaction has valued £13 million. This is a fifth lower than the previous six months.

Both office (down 39 per cent) and industrial (down 22 per cent) have seen their average values fall, but the retail and leisure space has enjoyed a somewhat unexpected rise of 20 per cent. 

This has been driven by one sub-sector of the retail and leisure space, unit shops, reporting a remarkable increase of 138 per cent in the past six months to hit £23.1m.

However, the other areas of retail haven’t fared as well, with leisure (31 per cent), shopping centres (30 per cent), and retail warehouses (three per cent) all seeing declines in average transaction value. 

“There’s little ambiguity in these numbers, the commercial market is enduring a difficult period as a result of the UK’s wider economic struggles. But there’s a good chance that these recent declines are also the result of seasonal influences” says the managing director of Sirius Property Finance, Nicholas Christofi. 

“The summer is a quiet time for the property market in general, so this may be causing more drastic declines that we’ve previously seen. With the arrival of autumn, which is a real period of boom for the market, we’re hopeful that the numbers will start to show improvement, especially if the economy continues to show signs of recovery as it has recently been.”