The demand for office investment is up by 75% since this time last year and now outstrips industrial property, according to Rightmove’s commercial insights property tracker.
Figures from the commercial property website, measured by enquiries to commercial agents, show that demand to invest in commercial property of all types continues to grow ‘as the interest rate environment becomes more favourable’. Overall, demand to invest in commercial property is now 19% ahead of Q1 2024.
The highest year-on-year increase in investment demand was found in London, which was up 30%. Scotland was slightly behind, with 29%, followed by the East Midlands on 26%. Investment demand was lowest in Wales, which experienced a rise of just 3%.
The demand for office leasing was also up on last year, with the 19% rise taking enquiries to pre-pandemic levels. Industrial and leisure enquiries are also significantly up, with both at 37%.
Andy Miles, Rightmove’s MD of commercial real estate, said of the rise in office enquiries:
“Modern, well-positioned office space with great amenities and service is being used as an added incentive to attract top talent, to encourage them into city centres more, and is seeing strong demand. Older, energy-inefficient and less comfortable office spaces are struggling to meet expectations from office workers.”
Claire Williams, head of UK and European industrial research at Knight Frank, said the figures indicated a strong demand. She commented:
“Although the occupier market lacked the presence of ‘mega’ deals, the pipeline remains promising, with several sizeable assets under offer and expected to complete in Q2. Moreover, there are multiple significant requirements currently active in the market, indicating strong latent demand.”
Michael Sears, advisory panel member of Propertymark’s NAEA Commercial Committee, said he had also seen a positive shift in investor demand for commercial property. Commenting on Rightmove’s figures, he said:
“The commercial property sector continues to adapt to ensure many business sectors evolve to keep pace with ever-progressing trends and shifts in demand. As many towns and cities embark on substantial regeneration projects, there is huge potential in the medium and long term in delivering prolonged growth across many commercial channels and we are seeing a substantial keenness from investors.”
Rightmove’s research panel Living Room polled 350 office workers to ask what would tempt them back into the office. A shorter commute (51%), free or discounted food (39%), greater flexibility with working hours (34%) and better facilities (29%) were some of the top priorities.
The things people found most frustrating about working in an office were the commute (61%), the office temperature (27%) and poor office facilities (24%).
