Commercial property market - H1 and H2

The commercial sector is faring better, commercial rates tend to change more slowly than residential rates so it has not been such a roller coaster. Another thing to note with the market is that when rates (including commercial rates) fell so much over the last 2 years this was at a time where appetite to purchase commercial properties was low due to lockdowns etc. Because of this a lot of commercial buyers withdrew from the market and now they are returning rates are not far off what they were back in 2019. Areas of immense popularity at the moment are Hotels and apart hotels, with the rise of Airbnb and the increasing popularity to stay in the UK when holidaying this has become a very profitable niche to invest in. Office purchases seem to be on the rise too after a sharp fall in recent years.

The next move for asset managers, investors and landlords is to refurb and improve existing buildings. The biggest shift is likely to be from building new to improving old.

The Minimum Energy Efficiency Standards (MEES) require buildings to achieve a minimum EPC rating of E before they can be let. Almost 10% of London's office stock currently has an EPC rating of F or G, meaning that it will be illegal for this space to continue to be let next year.

80% of London's office buildings are below this minimum standard and will need to be upgraded by 2030, an equivalent of 15 million square foot per annum.

Expect a big shift to redevelopment and refurbishment as well as fluidity between use and occupiers.