Commercial Real Estate Market In United Kingdom - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

The Report on the Commercial Real Estate Market in the United Kingdom is segmented by Type (Office, Retail, Industrial, Logistics, Hospitality, and Multi-family) and by Key City into Urban-suburban and Rural Markets.

Market Snapshot

Study Period: 2016 - 2026
Base Year: 2020
CAGR: 7.58 %

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Market Overview

Growth in the size of the UK economy, in terms of GDP, averaged 1.3% (on an annualized basis) till Q2 2019. The economic growth in the United Kingdom remained modest at 1.2% in 2019.

  • The UK commercial real estate market will continue to support demand for both occupational and investment stock because of its strong fundamentals of low unemployment, currency advantage, and the tight supply of occupational and investment stock.
  • Provided the tight supply in the occupational market, prime rents are likely to come under upward pressure in certain markets this year. Uncertainty about Brexit has kept investors careful, despite ample liquidity and relatively high yields.
  • However, the demand for the office sector fell during Q3 2019, which was only a modest decline. Meanwhile, the demand for industrial space continued to rise, although the increase was only marginal. Alongside this, the availability of leasable space is unchanged across the industrial sector, marking a slight departure from the uninterrupted run of declining supply being reported since 2013. At the same time, vacancies are still rising sharply across the retail portion of the market, while the availability of office space also marks off up again. This prompted another increase in incentive packages on offer to tenants in both instances
  • Tenant demand is healthy across the United Kingdom, with little indication of weakening sentiment. Lack of available stock is one of the barriers to commercial real estate in the United Kingdom.

Growth in the size of the UK economy, in terms of GDP, averaged 1.3% (on an annualized basis) till Q2 2019. The economic growth in the United Kingdom remained modest at 1.2% in 2019.

  • The UK commercial real estate market will continue to support demand for both occupational and investment stock because of its strong fundamentals of low unemployment, currency advantage, and the tight supply of occupational and investment stock.
  • Provided the tight supply in the occupational market, prime rents are likely to come under upward pressure in certain markets this year. Uncertainty about Brexit has kept investors careful, despite ample liquidity and relatively high yields.
  • However, the demand for the office sector fell during Q3 2019, which was only a modest decline. Meanwhile, the demand for industrial space continued to rise, although the increase was only marginal. Alongside this, the availability of leasable space is unchanged across the industrial sector, marking a slight departure from the uninterrupted run of declining supply being reported since 2013. At the same time, vacancies are still rising sharply across the retail portion of the market, while the availability of office space also marks off up again. This prompted another increase in incentive packages on offer to tenants in both instances
  • Tenant demand is healthy across the United Kingdom, with little indication of weakening sentiment. Lack of available stock is one of the barriers to commercial real estate in the United Kingdom.

Growth in the size of the UK economy, in terms of GDP, averaged 1.3% (on an annualized basis) till Q2 2019. The economic growth in the United Kingdom remained modest at 1.2% in 2019.

  • The UK commercial real estate market will continue to support demand for both occupational and investment stock because of its strong fundamentals of low unemployment, currency advantage, and the tight supply of occupational and investment stock.
  • Provided the tight supply in the occupational market, prime rents are likely to come under upward pressure in certain markets this year. Uncertainty about Brexit has kept investors careful, despite ample liquidity and relatively high yields.
  • However, the demand for the office sector fell during Q3 2019, which was only a modest decline. Meanwhile, the demand for industrial space continued to rise, although the increase was only marginal. Alongside this, the availability of leasable space is unchanged across the industrial sector, marking a slight departure from the uninterrupted run of declining supply being reported since 2013. At the same time, vacancies are still rising sharply across the retail portion of the market, while the availability of office space also marks off up again. This prompted another increase in incentive packages on offer to tenants in both instances
  • Tenant demand is healthy across the United Kingdom, with little indication of weakening sentiment. Lack of available stock is one of the barriers to commercial real estate in the United Kingdom.

Scope of the Report

  The report provides key insights into the United Kingdom’s commercial real estate market. It focuses on the market dynamics, technological trends, and government initiatives taken in the residential real estate sector. Also, the report sheds light on the key trends in the market, like factors driving the market restraints to market growth, and opportunities going forward. Additionally, the competitive landscape of the residential real estate market of the United Kingdom is depicted through the profiles of key players active.

By Type
Offices
Retail
Industrial
Logistics
Multi-family
Hospitality
By Key Cities and Regions
England
Wales
Northern Ireland
Scotland
London (City)
Amsterdam
Birmingham
Bristol
Manchester

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Key Market Trends

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

  

The United Kingdom provides a stable and secure political environment for commercial property investors across the world by earning their trust and confidence. There are huge investments by investors in industrial and logistics real estate, due to its rising demand in the country.

The industrial and logistics real estate market continues to be extremely robust. Leasing and investment showed marginal growth at the beginning of 2019, although rents continue to rise across the country.

There is increasing demand from people to buy in prime locations near economic centers, blended with growth in online-centric companies, which has put pressure on industrial and logistic investors and developers in the country.

The East Midlands has the highest volume of development, with four constructions of over half a million square feet, which was expected to be completed in 2019. In the South West, all four new industrial and logistic developments are being constructed in Bristol.

Uk_T1

Declining Vacancy Rates and Increasing Rents of Office Spaces in London

Rents for new and refitted Grade A space in most parts of the West End, Midtown, South Bank, City, and City fringe are expected to rise by 2020. This is mainly driven by low vacancy and stronger than anticipated post-Brexit vote occupier demand. Due to disparity in real estate costs, occupiers are migrating toward eastward regions to the city and city fringe sub-markets, where the rents for office spaces are cheaper.

In London, availability fell for the second consecutive quarter, reflecting a vacancy rate of 4.56%. The relative lack of speculative space in the near-term pipeline was expected to keep vacancy rates in check during 2019. In the UK region, office availability fell to its lowest level for 13 years. There is now a vacancy rate of 7.1%. The supply of new space is particularly low, and as in London, it will be placed under downward pressure by the tight pipeline. The vacancy rate for new and refurbished space is just 1.3%.

Uk_T2

Competitive Landscape

The commercial real estate market in the United Kingdom is fragmented due to a low level of market share concentration. UK real estate technologies were anticipated to continue maturing in 2019. It continues to be a prominent technology and innovation funding and experimentation zone. 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.

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET INSIGHTS

    1. 4.1 Current Economic Scenario and Consumer Sentiment

    2. 4.2 Commercial Real Estate Buying Trends - Socioeconomic and Demographic Insights

    3. 4.3 Government Initiatives and Regulatory Aspects for Commercial Real Estate Sector

    4. 4.4 Insights into Existing and Upcoming Projects

    5. 4.5 Insight into Interest Rate Regime for General Economy and Real Estate Lending

    6. 4.6 Insights into Rental Yields in Commercial Real Estate Segment

    7. 4.7 Insights into Capital Market Penetration and REIT Presence in Commercial Real Estate

    8. 4.8 Insights into Public-private Partnerships in Commercial Real Estate

    9. 4.9 Insights into Real Estate Tech and Startups Active in Real Estate Segment (Brokerage, Social Media, Facility Management, and Property Management)

  5. 5. MARKET DYNAMICS

    1. 5.1 Drivers

    2. 5.2 Restraints

    3. 5.3 Opportunities

    4. 5.4 Challenges

  6. 6. MARKET SEGMENTATION

    1. 6.1 By Type

      1. 6.1.1 Offices

      2. 6.1.2 Retail

      3. 6.1.3 Industrial

      4. 6.1.4 Logistics

      5. 6.1.5 Multi-family

      6. 6.1.6 Hospitality

    2. 6.2 By Key Cities and Regions

      1. 6.2.1 England

      2. 6.2.2 Wales

      3. 6.2.3 Northern Ireland

      4. 6.2.4 Scotland

      5. 6.2.5 London (City)

      6. 6.2.6 Amsterdam

      7. 6.2.7 Birmingham

      8. 6.2.8 Bristol

      9. 6.2.9 Manchester

  7. 7. COMPETITIVE LANDSCAPE

    1. 7.1 Market Concentration

    2. 7.2 Company Profiles

      1. 7.2.1 Developers

        1. 7.2.1.1 Land Securities Group PLC

        2. 7.2.1.2 Segro PLC

        3. 7.2.1.3 British Land

        4. 7.2.1.4 Derwent London

        5. 7.2.1.5 Hammerson

        6. 7.2.1.6 Capital & Counties Properties PLC

      2. 7.2.2 Real Estate Agencies and Trusts

        1. 7.2.2.1 Shaftesbury PLC

        2. 7.2.2.2 Tritax Big Box Reit PLC

        3. 7.2.2.3 Unite Group PLC

      3. 7.2.3 Other Companies (Startups, Associations, etc.)

        1. 7.2.3.1 Wayhome

        2. 7.2.3.2 AskPorter

        3. 7.2.3.3 Landbay

        4. 7.2.3.4 Thirdfort

        5. 7.2.3.5 RentProfile

  8. 8. FUTURE OF THE MARKET AND ANALYST RECOMMENDATIONS

  9. 9. INVESTMENT ANALYSIS

    1. 9.1 Direct Investments

    2. 9.2 Indirect Investments

  10. 10. DISCLAIMER

  11. 11. ABOUT US

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Frequently Asked Questions

The Commercial Real Estate Market market is studied from 2016 - 2026.

The Commercial Real Estate Market is growing at a CAGR of 7.58% over the next 5 years.

Land Securities Group PLC, Segro PLC, British Land, Derwent London, Hammerson are the major companies operating in Commercial Real Estate Market.

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