Investment in commercial property has fallen across all sectors in what has been described as a ‘difficult six months’, according to market analysis by Sirius Property Finance.
The debt advisory specialist analysed UK commercial property investments over the last six months and compared it to the six months before.
It found the industrial sector suffered the most in terms of the amount invested, with a significant 55% drop from £6.9bn to £2.9bn.
Investment in office space also fell 55%, driven by a 63% reduction in investment outside of central London. Office property transactions experienced the sharpest decline, with 44% fewer deals being done.
Despite this, the office sector remained the most popular commercial sector, receiving the highest level of investment overall at £3.8bn.
Retail and leisure property investment was down 45%, driven by a 75% drop in shopping centre investment and a 74% drop in leisure.
As well as lower overall investment, the data found the average amount invested per transaction has also fallen across the board. The biggest decline was noted in the industrial sector, down 35% from an average £22m per deal to £14.3m.
Sirius Property Finance head of corporate partnerships Kimberley Gates comments: “It has been a difficult six months for the commercial sector. It has been struggling since the start of the pandemic and the subsequent retreat from town and city centres, but now that additional economic uncertainty has been placed on top, the situation has worsened.
“Looking forward, the commercial sector’s recovery is going to be dependent on taking a more contemporary approach to space. While industrial units are likely to return to strength due to the immovable presence of e-commerce, retail and offices need to adapt to modern sensibilities.
“Mixed-use space is important – living, working, and playing in one multifaceted building, for example – but so too is a more experiential approach to physical retail, providing shoppers with something more than online retail can provide.”