Commercial property market expected to suffer further economic downturn in 2023

August 3, 2023
Posted in News
August 3, 2023 veps

Industry analysis by debt advisory specialists Sirius Property Finance reveals that the UK commercial estate agency market is predicted to shrink this year, as economic turmoil frustrates an industry that was finally starting to show signs of post-pandemic recovery.

Sirius analysed the annual revenue of the UK’s commercial estate agency market since 2013 — using data sourced from IBISWorld — to see how it has performed over the last decade, and what that might mean for the future of agents who operate outside of the residential sector.

The data shows that the commercial estate agency market peaked in 2019 when after enjoying annual growth of 21.2%, market revenue hit £7.3bn.

In the same year, the number of businesses operating in the commercial agency space increased by 32.1% to reach 7,549 — showing that confidence and expectation in the UK’s commercial space was high.

But when the pandemic struck, the commercial property sector entered a period of hardship, with annual revenue falling by 4.4% in 2020, before falling a further 12.8% in 2021.

When it looked like the market was in freefall, 2022 saw growth of 14.9% as revenue exceeded £7bn and hit its highest point since the pre-pandemic peak.

In 2022 the sector also saw the number of agents increase by 4.1%.

Despite this promising pandemic recovery, the more recent economic turmoil engulfing the UK property industry is expected to cause the commercial market to shrink once again.

Forecasted figures suggest a revenue decline of 5.6% in 2023, despite the number of businesses operating being expected to rise by 2.3%.

Kimberley Gates, head of corporate partnerships at Sirius, commented: “Commercial property is experiencing a moment of transformation unlike anything that’s really come before.

“The rejection of high street shopping and office-based working creates an existential crisis for the industry.

“Throw a heightened level of economic uncertainty into the mix and you’ve got a difficult period for the market to navigate.

“But while the short-term outlook isn’t great, we don’t expect the decline in commercial sector activity to be long lived.

“Not only are the UK’s high streets destined to be transformed into mixed-use havens of work, rest, and play, but the warehousing and distribution side of commercial property is only going to get bigger as online retail continues to thrive.”

source: bridgingandcommercialcouk