The last two years have caused a lot of uncertainty, so it is easy to assume that investing in commercial property right now may not be the smartest of moves.
But if you’re an experienced investor, this couldn’t be further from the truth for you.
The market is upturning, making now the perfect time to seize opportunities, especially within the commercial property space.
Don’t believe us? We’ve given you six reasons why you should be investing in commercial property right now.
Reduced Rates on Commercial Loans
This month, Shawbrook Bank announced it was reducing rates for commercial and semi-commercial finance, with rates starting as little as 5.19%.
The move by Shawbrook is something we anticipate other lenders following. With competitive rates, investors should be compelled to seize these opportunities and add commercial property to their portfolios. It’s a market that despite facing challenges, continues to present a real opportunity.
Shoppers are back spending
The fact is, people are back out in their hoards, which is exactly what businesses have been waiting for. But even better, data shows that people are actually spending more than pre-pandemic.
In Leeds city centre, the weekday offline spend index was 100 pre-pandemic, but it is now at 109. Furthermore, despite a lack of tourists visiting the capital, London is at 95, only 5 points below where it was pre-pandemic at 100. This demonstrates that despite fewer visitors, locals are still willing to spend money offline.
Return of Brick and mortar retail?
Recent moves by the biggest brands across the UK evidence the fact that in-store shopping may be on the up. Despite the rise of online shopping, businesses are noticing the value in brick and mortar shops, with some opening physical stores for the first time.
The fastest-growing fashion brand in the UK, Gymshark, is soon to be opening its flagship store in London. The sportswear brand has established itself as a household brand, despite only operating as an e-commerce business. But their big business move is brick and mortar – this speaks volumes for the industry.
The return of footfall, spending and in-store shopping habits is not only a benefit for retail businesses but all surrounding businesses, such as cafés and bars. What’s more, office space brings more people, who spend in the retail and hospitality venues. These businesses are all spaces that can be capitalised on by commercial property investors and create a circular effect that is mutually beneficial for all.
The question of office space
The big debate recently has been will people return to offices? The answer is largely, yes. Whilst many businesses are operating on a hybrid basis, the fact of the matter is most businesses want their team in the office.
The trends seem to show that from an investment perspective, office space is still in demand, but may need to be slightly repurposed to fit demand. For example, research from RIC suggests that 87% of respondents are seeing office spaces being repurposed away from traditional office setups, with 76% identifying a demand for flexible workspaces, and 69% identifying that allocation per desk appears to be the way forward.
Whilst this shows that there is certainly a change in demand for office space, for investors looking to purchase office space, the repurpose to fit demand would be relatively low cost, and the overriding message shows that the demand for office space is very much still high.
Staycations are here to stay
Throughout the pandemic, there was a boom in the rise of buy-to-let property purchases for holiday home usage. This obviously met a very large demand that fit the restrictions of the time.
But moving forward into the new normal, there has been a fear the popularity of staycations would not last. It is worth remembering that UK holidays were already popular pre-pandemic, and experts concur that the trend is here to stay.
Tourism bosses across Snowdonia National Park in Wales, for example, have already seen a demand in booking for summer and actually expect to exceed numbers from last year.
This means that though there was a worry that the UK holiday market would not remain as lucrative in years to come, leaders in the tourism industry believe it to be false, making now the time to invest in a buy-to-let holiday property.
Advantages of Commercial Finance
Investing in commercial property has several advantages, and most of those come down to the benefits of commercial finance.
Commercial finance is generally more flexible than other finance options such as personal bank loans, which require much more rigid financial checks on the individual. When working with a broker to secure commercial finance, you are more likely to be able to find an option that suits your needs, even if your history isn’t pitch-perfect.
What’s more, there is more variety when it comes to commercial finance, all with different advantages based on your capital and specific requirements.
We would always suggest working with a broker when looking to secure finance, as their connections could provide you with a finance option you may not have previously considered.
With commercial property continuing to flourish despite ongoing challenges, now is the perfect time to invest in your next commercial property.
Need a helping hand? Contact a member of our team today.