In the latest signal of investor confidence in British economic stability and output, key sectors across the UK commercial property landscape have attracted growing levels of investment. 

The retail, office and industrial sectors combined have received an investment of £41bn in the year to date, according to the latest figures in Colliers’ property snapshot. This figure represents an uptick relative to the £30.4bn invested in 2020 and £36bn in 2019, with overseas investors responsible for over 50 per cent of these property investments so far this year. 

After three centuries of little change in the office sector, since the first commercial lease was signed in London in the 18th century, there is rapid transformation occurring in commercial real estate (CRE) as workspaces adapt to flexible and hybrid approaches to working. JLL reports predict that the pace of this change will mean 30 per cent of office space is flexible in some form by 2030. 

Landlords and operators are reacting to this evolving need for businesses by adapting to hybrid working adjustments, including design, functionality and services on offer. Others are partnering with existing providers experienced in fulfilling this offering. Looking ahead, this will be a key driver of demand. Another key driver of CRE investment flows is ESG considerations. For instance, Savills research indicates that 44 per cent of central London office developments, which started in 2021, are targeting a BREEAM rating of Very Good or above.

As such, office yields have held firm at sub-4 per cent for London assets and sub-5 per cent for regional offices. The biggest step change has occurred in the retail sector wherein the Colliers report outlines a five-month high, 38 per cent above five-year monthly averages, of £755m investment for September. The combination of greater e-commerce activity alongside growing in-person transactions has strengthened the appeal and resilience of retail assets.