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Commercial property market targets: Q2 and beyond

As the end of Q1 moves into view, the commercial property market is still waiting for the brighter future many forecasted at the beginning of the year. The going has been slow so far. But good deals are still out there for investors – it’s just a question of where.

What lies ahead for residential property in 2024?

If positive news has been thin on the ground for the commercial property market as yet in 2024, recent updates on the residential sector suggest that conditions may finally be improving.

Housebuilding has seen a notable turnaround in recent months, with a stabilisation in construction output and the first rise in new work since mid-2023 broadly interpreted as encouraging. Combined with a drop in inflation rates and investors could see more opportunities arise as the year progresses.

Interestingly, within this sector, student accommodation remains a healthy space, in particular purpose-built accommodation. As for private lets, much depends on the future of the government’s Renters Reform Bill, which currently will ban fixed-term tenancy agreements for students.

Where to target investment in office space and retail

Office space is garnering more attention, with an uptick in movement coming into the year. An improvement in borrowing conditions should have a positive impact going forward, with the continued return of the commuter also contributing.

However, momentum is largely focused on prime and green office space. In terms of location, big cities remain the key markets – central London as well as Birmingham, Bristol, Edinburgh, Leeds and Manchester.

As for retail, this space remains perhaps the most in need of sustained economic growth to drag it out of its slump. Food outlets and local-focused retail continue to be among the best bets for investors.

Where to look in logistics and warehousing

While the market awaits meaningful movement in the residential, office and retail spaces, logistics and warehousing remains the engine room of growth, although it hasn’t been immune from the impact of poor economic conditions.

For investors, a focus on green properties with clearly discernible sustainable profiles remains critical, while “strategic sheds” continue to be a key growth area – with proximity to major urban markets and transport hubs important.

What often overlooked sector should investors explore?

Aside from logistics and warehousing, life sciences and healthcare continues to offer healthy returns for investors, although this sector is smaller in size. The recent announcement of a major new life sciences hub in Liverpool, which will have a strong environmental profile, is evidence of development in this space.

A lack of existing facilities, longer-term tenants and premium rents, as well as an ageing population should drive growth all make life sciences and healthcare a solid choice for investment.

Securing good deals and your choice of commercial finance provider

If the new dawn that many were predicting for the commercial property market is proving slow to arrive, there are signs that conditions in key sectors are finally beginning to improve. If a meaningful upturn does transpire, then access to finance will be key for investors.

Ease of accessibility, flexibility and affordability will be essential to taking opportunities as they appear throughout the rest of 2024. And this is why the choice of commercial loan and mortgage provider is critical.

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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