Commercial Property – What the Future Holds
Commercial Property
 What the Future Holds

Commercial Property What the Future Holds

The commercial property sector in London is experiencing a significant shift, with prime commercial office space in the city undergoing a transformation. In this article, we’ll explore the key trends and developments shaping the future of the commercial property market in London.

Diverse Portfolio Assets
Diversification is a critical aspect of the evolving commercial property market. REIT’s are focusing on creating portfolios with diverse assets, catering to a broad range of tenant needs. This approach allows for increased flexibility and resilience in an ever-changing market. Leases for shops and offices can often be longer and the turnover of tenants is lower, making the commercial property sector appealing at a difficult time for the housing market. UK Investor Magazine highlights the appeal of commercial space in the current economic climate identifying “…an imminent supply squeeze in certain segments of the commercial property market” this is due to the cost of development build costs and finance rates, which has lead Investment Managers to confidently predict that there is potential for strong commercial rental growth due to a lack of pipeline commercial space to meet demand.

Quality Assets Meeting Tenant Demands
Tenant demands encompass both high level fit out specifications and Environmental, Social, and Governance (ESG) credentials in the prime commercial real estate market. High-quality assets that meet these criteria are increasingly sought after. The London property market is witnessing a growing desire for office and shop spaces, aligning with businesses’ needs, especially in the wake of the shift towards hybrid working models. Tenants are increasingly favouring properties that offer a blend of functional excellence and ESG compliance.

Shift Away from Canary Wharf
The Guardian reported on a decline in Canary Wharf’s appeal as a global financial centre. The decision by HSBC to move from Canary Wharf to the City of London, with other companies like Clifford Chance following suit, underscores the post-pandemic shift in demand for office space. Hybrid working models and the perception of Canary Wharf as a “sterile” environment have contributed to this change. To revitalise the area, Canary Wharf is exploring diversification into life sciences, technology, media, and charity sectors. This shift in tenant needs has opened up more opportunities for prime office rentals in central London locations such as Soho and Mayfair.

Location Variety for Live, Work, Play
The concept of “live, work, play” is gaining prominence in the commercial property market in response to tenants’ employees work life balance needs post-pandemic. Locations like Mayfair and Soho are becoming increasingly attractive for businesses due to their versatility. These high footfall, highly prominent areas offer a variety of amenities and lifestyle options, making them appealing for both work and leisure. Being centrally located means that central London locations have excellent transport links, as well as dining, shopping and entertainment options, solidifying them as prime commercial office locations that are attractive to tenants.

Residential Property Impact
The Standard notes that London’s private lettings market volatility is driving investors toward commercial property. Longer leases, lower tenant turnover, and the growing demand for office and retail space are making commercial property investments an appealing option. The balance between residential and commercial property investments can help mitigate risks in the property market. They report that “almost a third of landlords in the capital intending to add to their portfolio are considering making the switch” with 38% of landlords looking to invest in office space.

Unica Capital’s Leading Role
Unica Capital is at the forefront of the evolving London real estate landscape, driving the surge in prime office rents and reshaping the city’s office market. Their commitment to excellence and strategic investment in historic centrally located buildings, such as the recently completed prime commercial office space on Portland Street, reflects their pivotal role in shaping the future of London’s business landscape.

The future of the commercial property sector in London holds promise and opportunity for investors and developers who embrace diversity, quality, and adapt to evolving tenant demands.

Published: October 20 2023
Author: Michala Chatel

Commercial Property What the Future Holds

Get in Touch

This field is for validation purposes and should be left unchanged.

Get in Touch