​

The virtual roundtable was hosted by Medianett Publishing’s deputy print editor Andreea Dulgheru, who was joined by Natalie Glover, bridging, development and commercial finance at SPF Private Clients; Emma Ross, managing director at Ross Commercial Finance; Kara Williams, intermediary relationship manager at Together; Michelle Walsh, head of intermediary sales at Together; and Andy Keehner, managing director at Finanze.

The panel deliberated the performance of the commercial market over the past year, as well as the regions and industry sectors which have thrived or struggled.

In the commercial sphere, it was industrial developments the panellists saw rise to prominence last year, with working from home still leaving a mark on the market and the cost of living crisis dampening the appetite to invest in hospitality facilities.

Natalie said that, despite the dust settling from Covid and employees being encouraged to return to the office, many companies were adopting the hybrid model, as opposed to the industrial sector where people need to manufacture. “There still needs to be space for haulage companies and deliveries,” she commented, pointing to the boom in online shopping.

•   The Finance Professional Show 2023: The Video
•   Together launches new advertising campaign to 'open the door' for borrowers
•   UK commercial property lending set to shoot up by 32% in next five years

Andy concurred that the “race for space” was keeping the industrial and warehouse market buoyant, however he noted that some borrowers’ eyes may have been bigger than their stomachs: “You have to be a bit careful because a lot of [investors] over-bought their space during Covid, so there are some industries out there that have more space than they actually require now . . . there is a bit of a balancing act.”

Michelle highlighted that, over the past two weeks, she had seen three industrial clients looking to move premises, with the aim to buy one major unit and convert it into four. “They're going to trade from [around] 40% [of the building] and rent the other 60% out. The rental income they can get from the 60% will be used to pay the mortgage — they're basically in there rent-free.”

Dividing large units into five or six smaller segments is attracting trades and companies of similar sectors, added Michelle. “People want to be around others that are in the same kind of industry.”

However, commercial market changes are not reserved to industrial units. Kara predicted that office space would also soon find itself competing in the ‘race for space’ in its own right. “We've definitely seen a decrease in inquiries [for bigger offices] with more people working from home since Covid.” However, for secondary, local offices taken up by smaller businesses, she believes more employees are going back to the office to make use of free parking and heating, as a consequence of the rising cost of living.

Emma, who deals largely in Scotland, noted a trend in investors making office spaces more social. “A lot of people are getting commercial offices and, automatically, wanting to turn them into residential — but they’re not. They’re actually wanting to turn them into quirkier, ‘residential’ offices.

“it's more of a social place with spaces for people to go and hang out, rather than proper old school serviced offices,” continued Emma.

Despite the triumphs of the industrial sector and the evolution of the office, not everywhere up and down the UK has enjoyed the same success or transition.

Michelle indicated that commercial property investment volumes in Cardiff and Scotland had struggled in 2023, but Greater London continued to attract strong levels of investment. She also believes prime cities where there are students will continue to perform well.

According to Emma, she has seen a large amount of commercial-to-residential conversions in Scotland, particularly for student accommodation . Kara — who deals with the Northern England territories — has also seen a lot of commercial-to-residential conversion activity from foreign investors.

Additionally, Andy identified the north west as a hotbed of commercial activity, but took a more prudent outlook towards the PBSA sector.

“I would [be cautious] with student accommodation . . . because there are rumours that universities may start to struggle a bit and you might find some closing because [of] the lack of funding that's going on there, and this will obviously hit all of those PBSAs.”

Watch the full webinar, here.