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Where to Find Value in the Commercial Property Sector

2nd August 2021

As a leading commercial estate agency, we’ve been keeping a particularly close eye on the impact that the Covid-19 pandemic, and associated lockdown restrictions, has had on the wider property market. The commercial property sector in particular has been heavily affected by the pandemic, with struggling shopping centres and office buildings causing commercial property investors to rethink their paths going forward. 

Despite the negatives that have gone hand-in-hand with these uncertain times, commercial valuations of recent times unveil some incredible investment opportunities. 

Competitively priced commercial properties are now flooding the market, but will the investment you make now in this struggling sector really pay off? Our commercial estate agency stays abreast of the latest market development so investors like you don’t have to. Our expertise extends to not just insights into the current state of the sector, but to trends that will push the commercial property market out of the red and back into the black. 

There’s plenty of value to be secured in the commercial property sector, particularly in this new post-lockdown world, but where to find it? In this blog post, our commercial valuations experts unveil what the changing commercial property market has in store for investors, where value can be found in this struggling sector, and how to increase your return on investment in the long and short term.

The current state of the commercial property market

The pandemic may have worked wonders for some businesses – with organisations classed as ‘essential’ or those operating predominantly online reporting huge profits in previous months – yet the remainder of the business world has witnessed widespread collapse. A proportion of these businesses have survived and are now working hard to secure their futures as lockdown restrictions continue to ease.

The businesses that didn’t however are leaving a number of vacant commercial properties in their wake. Since March 2020, the commercial property market has seen prices plummet. Commercial valuations have floundered, with shopping centres and retail parks in particular feeling the impact. 

Post-lockdown, some of these failing businesses have enjoyed modest pick-ups but nothing like the profit margins they need to recover quickly. With this, commercial valuations have remained on the low side, and whilst that’s a negative for members of the business community, it certainly represents good opportunities and value for the investors our commercial estate agency represents.

Finding value in an uncertain post-lockdown world

When seeking out commercial property, you’ll use a solid commercial valuation to determine whether it’s the right investment for you. Our commercial estate agency takes a long list of factors on board to determine its commercial valuations, meaning our clients can discover the best value and investments, even during these troubling times. 

Location is a key consideration when determining commercial valuations. A commercial property’s proximity to other commercial properties, amenities and travel links all contributes positively to its overall market value.

The potential for a property to earn income is also carefully analysed by our commercial property experts. Yet this factor is more difficult to determine given the uncertainty of so many market sectors at this time. 

For many commercial properties, and the businesses that call them home, yields have been dramatically impacted by lockdown restrictions. Some business premises have been over-spaced by as much as 40% to allow for social distancing and other measures, which is having an impact on their earning potential.

Rethinking the commercial property sector for the future

As indoor social distancing measures are likely to remain for the foreseeable future, and many companies adopt their Covid-secure work from home policies more permanently, the very core of the commercial property sector is changing. But this isn’t necessarily a bad thing for prospective investors.

Our commercial estate agency, and many others, are witnessing a revolution. Investors are having to think outside the box to realise the full potential of their commercial property assets going forward as demand is down from the businesses that traditionally occupy these types of properties. Commercial spaces are being fully or partially repurposed to ensure commercial valuations grow over time, even as bricks and mortar based businesses don’t.

Encouraged by looser commercial planning laws, disused shops are being remodelled to become more fluid spaces that can be used for a plethora of commercial purposes. 

Surplus land, previously used for parking for shops and supermarkets but made redundant by the surge of online shopping, is being sold and transformed. Larger commercial and industrial premises that benefit from major road links are being picked up by logistics businesses and used as much-needed distribution centres.

Smaller offices with their own front doors are being favoured over larger commercial spaces and trading floors, as businesses move online but still want a safe social space to keep their company culture alive. Hot-desking – where remote employees and self-employed professionals use rented desks in office spaces to work – is becoming more popular than ever too, which means offices of all sizes aren’t being wasted.

Commercial property and its use is changing. Investing in your commercial property portfolio now and improving its potential for the long haul will ensure the attractive ROI every investor wants and the commercial space the economy needs. 

To discuss your commercial property investment requirements or for further information about our commercial valuation service, please contact us today.