Development land is the hottest commercial property
Development land is currently the most in-demand type of commercial property, research reveals.
Debt advisory specialists Sirius Property Finance analysed current demand across the commercial property sector by measuring the number of commercial assets currently available on the market that have already been sold subject to contract (SSTC) as a proportion of all available investment opportunities.
The research found that the highest level of commercial buyer demand is currently attributed to development sites. Of all development opportunities currently listed on the market, 37.4 per cent are already SSTC.
Commercial appetites for development sites are at their strongest in the East of England, the research found, where demand sits at 43.9 per cent.
In contrast, leisure and hospitality assets struggle most to find interested buyers, with investment demand of just 13.9 per cent nationally, dropping as low as 7.5 cent in the North East.
Read more: Property investors planning to bolster portfolios
The rise of online retail is contributing to strong demand for warehouses and industrial units, with demand currently measuring 32.3 per cent.
In contrast, nationwide demand for bricks-and-mortar retail space is currently 24.4 per cent, reflecting the challenges of high street trading.
“We’re seeing the dominance of online retail having a significant impact on commercial property, boosting warehouse demand and suffocating physical retail demand,” said Kimberley Gates, head of corporate partnerships at Sirius Property Finance.
“In contrast, the aftermath of Covid and the ongoing cost of living crisis is continuing to impact appetites for leisure and hospitality space and it remains the least in demand sub sector within the commercial space.”
Read more: CrowdProperty inks new institutional funding deal
Meanwhile, demand for office space remains healthy, the research found, with national demand sitting at 30.3 per cent across England, but rising as high as 44.9 per cent in the West Midlands region.
“There is an undeniable ebb and flow to commercial property demand which means those sectors that are currently struggling could find their fortunes turning in the near future,” said Gates. “For example, as and when the cost-of-living issue is brought under control, restaurants and bars will become more affordable and attract more customers which will, in turn, lead to an increased demand for hospitality and leisure units that have fallen out of favour since the early days of the pandemic.
“Furthermore, high demand for development sites shows that developers are confident about the future, and that current woes will improve before too long.”
Read more: Everything you need to know about property-backed IFISAs
