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What commercial property investment to target in Q3 2022

With a notable level of uncertainty continuing to define the market, identifying targets is challenging for commercial property investors. But there are good deals out there – it’s just a question of knowing where to look.

Opportunities growing in key logistics subsector

As we move into the third quarter of the year, logistics and warehousing remains the market powerhouse, with demand still outstripping supply on a national basis. A fresh upturn in Covid cases and the instability caused by the ongoing war in Ukraine is only likely to reinforce the position of this sector.

Interestingly, there is yet further evidence that hyper localisation and the rapid growth of ultrafast delivery services is a trend that offers investors potentially significant returns. The demand for small-scale warehousing and logistics spaces, or dark stores, continues to grow, pushing rents up for these properties significantly.

This is currently a London-based market development, but other major cities may follow suit in the near future. This is definitely one to watch for investors.

Polarisation key trend in re-emerging office space

Elsewhere, opportunities are not so clear cut. Much is being made of the re-emergence of the office space market, with the return of the commuter a notable driver. However, growth is not occurring across the board, with demand focused on space with the right facilities and the right sustainability profile.

Opportunities lie in office buildings that can meet current and future environmental standards and staff wellbeing demands, with features such as in-house gyms and cafés. Also, floor space is another differentiator, with dedensification a key trend.

High street still suffering but opportunities exist

At the other end of the scale, the high street is still struggling, but that’s not to say there aren’t opportunities for smart investors. The decision to allow landlords to switch the purpose of city centre property to residential or leisure continues to offer potential, such is the continued demand for residential property in such areas.

The recent sale of a university property in Birmingham located in the heart of the city centre for development into residential use is an example of such an opportunity. The proximity to the central business hub, travel links and other key facilities meets the top-level demands of today’s renters.

Notably, going forward, pressure is being put on the government to further ease purpose-of-use regulations with regard to high-street and city centre property. If the government responds positively to this lobbying, commercial property investors could see more opportunities open up. In short, watch this space.

Market fragility puts the focus on the right commercial lender

Of course, any commercial property outlook at present must carry caveats relating to Covid and the impact of the war in Europe. As such, a continued flight to quality is likely to be visible in the sector throughout the year and into the next. Given these circumstances, it is essential that investors ensure they have the right commercial loan and mortgage lender.

To find out more about A&T Business Associates services for commercial property investors, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.

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