Demand to invest in retail commercial property has surged, with new figures from Rightmove showing a 35% increase compared to the same period last year.
This marks a significant turnaround from 2024, when retail investment demand was 15% lower year-on-year.
The latest analysis, based on enquiries to commercial agents about listings on Rightmove, highlights growing momentum across the commercial property market.
Overall demand to invest in commercial property is up by 20% compared to Q2 2024, buoyed by a more favourable interest rate environment as the Bank of England implemented its second rate cut of the year in May.
High-street retail investment demand has led the retail sector’s recovery, jumping by 56% over the last year – the highest level since 2021. This bounce back follows a period of subdued activity, with investor interest in retail remaining muted since 2022.
Rightmove notes that retail property supply has also decreased, with the number of available retail investments down by 4% compared with last year, a trend that may be supporting rising demand.
Leasing activity in retail is also on the rise, with demand from businesses to lease retail space up by 10% year-on-year, reflecting renewed appetite for physical premises even as online commerce continues to grow.
Beyond retail, the office sector is also rebounding. Investor demand for office space has climbed 65% compared to a year ago, reversing a 13% year-on-year decline recorded in 2024.
The demand from businesses to lease office space is up by 12%, and in London specifically, leasing demand has risen 14%. Key office markets such as Westminster and the City of London have seen even sharper rises, up by 29% and 21% respectively.
The industrial sector remains a standout performer. Investment demand has soared by 105% versus last year, while demand to lease industrial space has increased by 41%.
Commenting on the findings, Andy Miles, Rightmove’s managing director of commercial real estate, said: “The growth of the industrial sector has been one of the main stories so far this year, but we can see a resurgence to invest in retail and office space too.
“Rate cuts are helping investment into commercial property, and after a period of decline it appears that retail and office spaces are becoming more attractive to invest in.”
Michael Sears, NAEA Propertymark commercial advisory panel board member, commented: “It is positive to see a rejuvenated appetite regarding investment within the retail and office space sectors, especially considering habits have shifted significantly in recent years. Online commerce fundamentally changed how people shop in many cases, and the pandemic accelerated the home working revolution.
“However, these figures are the highest they have been since 2021 and show that there is still a healthy desire for high-quality retail space across the UK and that many employers are also finding a new balance for their office space requirements that complements hybrid working arrangements with their colleagues.
“These factors added together are a positive sign of a high street resurgence in many regions.”
Read the orginal article: https://propertyindustryeye.com/commercial-property-investment-bounces-back-amid-interest-rate-cuts/
