The UK commercial property market will see a revival due to demand for student accommodation, office space and retail development, a specialist lender has found.
Together’s Cities in focus 2025: Commercial property insights report supported this view, along with data from CBRE, which showed commercial property capital increased by 0.3% in March and rental values rose 0.4%.
On a monthly basis, CBRE found there was a 0.8% uplift in total returns.
A return to office working
Together found that employees going back to the office following a trend towards homeworking had resulted in demand for investment, with businesses either wanting new-build sites to cater to hybrid working patterns with lower overheads or to refurbish existing premises.
According to the report, 41% of the 500 property professionals, investors and developers polled revealed that modernisation and technology upgrades were behind some of the demand, and 38% said appetite for wellness-focused and fitness-related renovations.
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Further, 82% of respondents said office space was a good investment opportunity over the next five years, and 16% expected revenue growth of between 21% and 30% by 2030.
Private sector steps up to provide student accommodation
Together said as universities were finding it difficult to manage finances amid a freeze in government funding, there was a greater reliance on the private sector to meet the need for accommodation, despite a fall in reservations.
According to the lender’s survey, 81% of respondents said they would invest in this part of the market over the next five years as it presented a good opportunity.
Some 18% of this cohort said revenues were expected to rise by between 11% and 20% over the period, while a tenth predicted revenue growth of between 31% and 40%.
The future of the high street
Following a 1.4% rise in the value of sales across the retail sector to £517bn last year and a 0.7% increase in transactions, Together said online shopping would continue to be popular, prompting a need for quality logistics and distribution hubs in strategic locations.
By 2030, retail revenue from the high street, retail parks and shopping centres is expected to rise by an average of 32%, and 79% of commercial property professionals think shops will offer the best investment opportunity.
Some 18% said warehouses and industrial properties would deliver the best value for money investments, and 15% predicted growth would be between 21% and 30% over the next five years.
The commercial property landscape will be better in five years
Ryan Etchells, chief commercial officer at Together, said: “Whether it’s student housing or investing in the future of retail and office space, by 2030 the landscape for the commercial market will have changed and improved exponentially for investors.
“Whilst it’s good to see light at the end of the tunnel after a difficult few years, now is the time to support and nurture this growth so it is sustained.”
He added: “With all the new regulations and government plans for property over the last 12 months, there has been a rise in requests for rolling instead of fixed contracts on sites, staggering payments rather than investing upfront and shorter timelines.
“This is why it will be critical for these property professionals to continue working with the right type of lender who can ensure they’re financially poised and adaptable to seize new opportunities.”
