Commercial property sales 2021: Commercial Bounce Back

The pandemic has affected the way we work, the way we shop, and the way we socialise. It has had a huge impact on many different aspects of our lives. One area that has been shaken is the commercial sector. While 2020 held some dark days for commercial assets, 2021 is the light at the end of the tunnel. It presented a course of action to tackle the Coronavirus pandemic and the positive mentality saw figures for 2020 Q4 surpass initial predictions:

  • £12.4 billion was transacted
  • The year’s total investment volume reached £41.8bn
  • 22% lower than 2019 but higher than expected after the effects of the pandemic
  • Industrial & Logistics made up their highest ever proportion of the market at 20%

Commercial property has started to stabilise during this second quarter of 2021. Restrictions across the UK are starting to lift, and the COVID-19 vaccine is proving successful.

Source: Savills

Why the decrease in commercial investment?

 

1. Working from home

The past 12 months has witnessed many companies see their staff either work from home on a permanent / semi-permanent basis or be placed on furlough. The Office of National Statistics (ONS) data shows that 9.4% more people worked from home during 2020 then in 2019. Of the employed population, 34% did some work whilst at home during the lockdown.

 

2. Lockdown restrictions

The United Kingdom has currently faced 3 national lockdowns, as well as several local lockdowns spread across the country. Throughout these times, leisure and hospitality businesses have had to close. Only essential workers or those unable to work from home have been allowed on site or in office. Up until the government released their ‘roadmap’ for the country, that outlined the gradual lifting of restrictions, uncertainty created by the pandemic made investing in commercial real estate loans a risk for property investors.

  • Since the easing of restrictions, seated dining has increased by 2% between the 10th and 24th A large increase of these figures is expected as restrictions continue to ease.

Source: Office of National Statistics

 

3. Increase in online shopping

With non-essential shops having to close due to UK lockdown restrictions for the majority of the past 12 months, e-commerce has increased dramatically. The latest data from ONS indicates that 34.7% of March 2021 retail sales related to online shopping. The percentage has dropped slightly from the previous month (36.2%) but remains significantly higher than March 2020 which was reported at 23.1%. An area of commercial property that has had a positive reaction to the increase in online shopping are warehouses and distribution centres. These valuable properties have grown in capacity as UK consumers take to the virtual shopping basket.

Source: Office of National Statistics

After being cooped up inside for basically a year, when the restrictions eased this month for the first time, shoppers flocked to the high streets for the chance to purchase in-store. In fact, the footfall was double than the predicted forecast according to Springboard. Online shopping also increased, showing that the trend to purchase online remains strong amongst the British public. As people look to socially engage on a regular basis by meeting on UK highstreets, how this will affect the country’s new found love for online shopping is yet to be seen.

Source: The Guardian

A positive outlook

 

Retail

The UK retail industry is starting to recover. Sale volumes saw an increase of 5.4% in March 2021 when compared to the previous month. The amount spent has also increased by 5.5% since February. With the UK roadmap in place, retail is looking to make a strong comeback over the coming months.

  • Retail sale levels are 1.6% higher than pre-pandemic levels in March 2021 when compared against February 2020
  • Clothing store sale volumes increased by 17.5% over the past month
  • Non-food store sales (including second-hand good stores) increased by 13.4% from last month

Source: Office of National Statistics

 

Offices

The working environment has changed a lot due to the pandemic. The big question facing office buildings is whether companies will keep their employees working-from-home. The decrease in people testing positive for coronavirus (currently down by 13.2% from the last week) combined with the vaccine roll out is restoring confidence among commuters.

Source: Gov.uk

Interest in the regional office market (outside the capital) could indicate that areas further North may be a great potential investment. With government relocating departments, new infrastructure, and larger companies (such as the BBC) moving sections to Northern regions, the increase in office demand in these areas is likely to witness a greater demand. This includes areas such as Manchester, Leeds, and Birmingham,

Source: JLI

 

Hospitality

The red and amber no-fly zones have more people considering holidays in the UK instead of abroad. After the announcement of the government’s roadmap to a post-pandemic Britain, UK holidays are starting to fill out. Many travel companies within the UK saw a surge of searches and bookings. Areas that have seen the interest appears to be glamping and the rental of holiday cottages. Investing in these hospitality assets now could be a great place to start with commercial investments. Hospitality areas such as pubs and restaurants are also likely to see high volumes of demand as restrictions continue to lift.

If you’re interested in expanding your business, we provide bridging loans for limited companies. Buying a new office building? Looking to raise funds to put back into your company? We can provide a business bridging loan that suits your specific requirements.

Find out more about our commercial bridging loans here.

Source: Independent

How bridging can help with commercial real estate investments

In recent months we have witnessed a rising interest in commercial loans, but that’s not all. Development exit bridging loans are in high demand, and the need for large loans has never been more vital. Throughout the initial lockdown, we helped some of our clients convert their commercial assets into residential properties. With business returning to ‘normal’, we are starting to receive less enquiries regarding conversions. They’re now focused on investing in new business ventures and purchasing new commercial properties.

Check out our case studies here.

With the stamp duty deadline approaching, we wanted to ensure we would be able to help our clients meet their financial needs. So far, we have taken onboard 2 new funding lines during 2021 with a combined value of £350,000,000. We have dedicated these for clients in need of large loans who are looking to complete by the 30th June, and for those in need of a development exit loans.

Find out more information here.

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