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Commercial property investment opportunities for 2023

The last year has been another eventful one for the commercial property market but savvy investors have been able to capitalise on key trends. But with a deep recession looming, what investment opportunities does 2023 hold?

What can investors expect of warehousing in 2023?

Logistics and warehousing has been a bright point in 2022 and the sector should continue to offer good news for investors next year, not least as newly entrenched behaviours around online shopping remain strong, but investment will have to become increasingly targeted as the impact of headwinds grows.

The rising cost of borrowing will affect the entire market, with logistics and warehousing no exception, which is likely to lead to a recalibration in investment criteria. Also slowing growth will be the rise in business rates for the sector included in the Autumn Statement. These factors may well check the rapid rise of the nascent urban warehousing market.

Where to look in residential, retail and office space in 2023

Residential property development is another area that should remain prominent in 2023. While forecasts of falling property prices, and maybe even a crash, suggest greater caution from investors, demand for housing is likely to continue to be notable. The retail-to-residential subsector could really kick on in the year ahead.

As for retail, amid challenging conditions, opportunities will be harder to find. Primary shopping centres should still hold potential, but high-street space looks set for more difficulty despite the extension of business rates relief for key businesses in the Autumn Statement, not least as consumer spending power continues to fall.

The office space sector enjoyed something of a recovery in 2022, with the return of commuters a key driver. Steady if unspectacular growth is possible in the year ahead, although much depends on Covid-19 cases numbers and severity over the winter and ongoing disruption relating to the country’s transport infrastructure, as well as more general economic trends.

Why energy efficiency will define investment opportunities in 2023

Across the commercial property board, but particularly in reference to office space, investor activity is likely to be framed to a considerable degree by property energy efficiency. Landlords have only a few months to ensure that commercial properties comply with tightened regulation on minimum energy efficiency standards. Letting a property that doesn’t meet the regulation will become illegal from 1 April 2023.

This means that investors looking for a good deal will focus on buildings that meet, and exceed, these energy efficiency standards. Climate-conscious businesses and individuals will only want this type of property and are likely to be willing to pay a premium for building with a strong environmental profile.

The role of your commercial property lender in 2023

Despite the prospect of economic downturn and continuing market uncertainty, there will be opportunities for clued-up commercial property investors in 2023, but an organised approach and a deft hand will be vital to identifying good deals and taking advantage of them.

Integral to this planning and the ability to move on deals quickly and decisively is ensuring access to capital. As such, having the right commercial loan and mortgage lender on board will be vital.

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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