Rob Flint, commercial surveyor at Brown&Co, looks to the capital for positive change in the commercial real estate sector.

Although the recovery in the commercial real estate (CRE) sector may not be immediately visible, there are signs of optimistic change.

Recent forecasts from the Office for Budget Responsibility (OBR) suggest that a recession will be avoided and inflation will decrease faster than initially predicted.

In London’s CRE market, which often sets the tone for the rest of the country, there is growing discussion of renewed investment in office and retail spaces, particularly from sovereign wealth funds (SWFs) that have benefited from prudent investments in property allocations.

Cash-rich investors from countries in the Middle East and Southeast Asia such as Dubai, Kuwait and Singapore are also displaying greater interest in the UK, especially London and the bigger cities, accepting lower returns while competition is less fierce and prices more realistic.

There appears to be a positive shift in the demand for office and retail space, with more companies reassessing their office spaces following the Covid-19 pandemic.

Eastern Daily Press: Rob Flint, commercial surveyor at Brown&CoRob Flint, commercial surveyor at Brown&Co (Image: Brown&Co)

Although the trend of working from home led to a shrinking demand for office spaces, now that firms have had a chance to put their policies in place on the issue, many business owners are putting office relocations or expansions back on their agendas.

Furthermore, professional services firms are particularly keen to acquire new office space in the capital, and this trend is also apparent in Norwich.

Whilst it is true that the office rental market experienced a decline, data recently published in EG Radius indicates it was the “closest to meeting its pre-pandemic benchmark last year”.

Although there may still be challenges ahead, such as limited CRE growth in 2023, we must remain patient and wait for the right opportunities to arise.

As the CRE market continues to evolve, analysing the right opportunities becomes increasingly important. Choosing the right investment strategy, asset class and location can be critical to ensuring resilient investments are made.

Investors who focus on sustainability, ESG compliance and innovative technologies may be better positioned for long-term success. We are not quite there yet, but a positive change is coming.

You can contact Rob Flint, commercial surveyor in the Norwich office of Brown&Co, on 01603 629871.