As we move through 2024, the commercial property market in the South West is showing a mixed yet overall positive landscape. The slowdown in inflation has provided some relief to the market, fostering a more stable economic environment. This change is particularly beneficial as it helps to ease some of the financial pressures that both investors and occupiers have faced over the past few years and makes it more likely for interest rates to start reducing. Here’s a detailed look at the trends and developments across different sectors:
Retail Sector
The retail sector continues to face significant challenges. Despite this, there is a notable return of national retailers to high streets and market towns, suggesting a resurgence in these areas. Demand for larger retail spaces remains present but subdued, as retailers are cautious, seeking to secure the best possible terms in a still uncertain economic climate.
Industrial Sector
In contrast, the industrial sector is experiencing very strong demand across all sizes, particularly for freehold properties. This sector has been buoyed by ongoing structural changes and the continued growth of e-commerce, which drives the need for logistics and warehouse spaces. The demand is consistent and robust, reflecting the sector’s resilience.
Office Sector
The office sector has shown a notable bounce back, especially for smaller office suites under 1,000 square feet. This trend indicates a shift towards more flexible working arrangements, with businesses opting for smaller, more manageable spaces. The South West is somewhat sheltered from the oversupply issues seen in other regions, maintaining a healthier balance between supply and demand. The flight to quality remains.
Investment Trends
Investments in the South West continue to perform well, with sustained interest from high-net-worth individuals and family property companies. The region’s appeal is bolstered by its relative stability and the continued demand for quality investment properties. A number of investors are taking advantage of less competitive market conditions to acquire properties, whilst vendors are still achieving market value.
Even with the looming uncertainty of a general election, the market sentiment remains cautiously optimistic. Investors and businesses alike seem to prefer maintaining a “business as usual” approach, anticipating that the fundamental demand will persist irrespective of political changes.
South West Commercial Property Market Team
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