Outlining her predictions for the UK commercial property market in 2018, Emma Cox, sales director of commercial mortgages at Shawbrook Bank (pictured above), told Bridging & Commercial that she expected to see modest capital and rental growth across the sector, but with regional variations depending on the dynamics of the local markets.

Emma explained that Brexit created uncertainty within the wider business community, which was ultimately the tenants for commercial investors.

“…Particularly in the SME segment, these businesses are unlikely to re-locate abroad with most still being run within a family.

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“For some of the large commercial spaces, I think we may see space being split into smaller units to attract a wider spread of smaller tenants, rather than a reliance on one large tenant – and the trend of ‘flexible working’ and ‘desk renting’ is likely to grow in the serviced office market.”

Emma felt that commercial investors were taking advantage of these trends in the market based on their own business models.

“Some prefer an approach with either shorter traditional leases or 12-month licences, while others may opt for the more hands on approach of renting desks for hours, days, weeks or months.”

Looking at how commercial lenders could be impacted, Emma added that most lenders were more accustomed to a traditional commercial investment model with longer leases, but could see some smaller challenger banks move into this market.

As for whether it produced more risk, Emma stated: “It is a different sort of business model.

“Perhaps one that is more akin to a trading business due to the fact that with higher turnover of individuals and SMEs renting space, there may be a need for more continual marketing for tenants with shorter average stays.

“Some investors may also choose to create communal spaces, such as cafes and rentable meeting rooms, which require more hands-on management and staff.”