Office space and student housing are two sectors sparking a renaissance in commercial property demand, according to mortgage lender Together.
Some 82% of property professionals, investors and developers agreed that office space offers a good investment opportunity over the next five years, with almost a fifth (16%) expecting revenue growth to increase by between 21 and 30% by 2030.
Meanwhile 81% think investing in student housing and accommodation over the next five years represents a good opportunity.
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.
“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.”
Office spaces
After the pandemic a ‘back to the office’ mandate triggered a renewed appetite for investment, with businesses either looking to new build sites that can cater to hybrid working patterns and lower overheads, or refurbish existing sites to meet the demands of today’s modern workforce.
Indeed, 41% of property professionals, investors and developers confirmed that modernisation and technology upgrades and 38% added that demand for wellness-focused and fitness-related upgrades are both top trends across all sector office refurbishments.
Student accommodation
At a time when universities are struggling to manage and government funding has been frozen, the private sector is being increasingly relied on to meet the shortfall. Even with a recent dip in student dorm reservations, demand is still high for student accommodation, particularly Purpose-Built Student Accommodation (PBSA).
So much so, 18% of this group are expecting the revenues to increase by between 11 and 20% over that period and 10% of this group foresees revenue growth here to increase by between 31 and 40% over the period.
Instore vs. Online: the future of the high-street
Last year, the retail sector grew with the value of sales increasing by 1.4% to £517 billion, and the number of transactions increased by 0.7% which, after two years of decline is a clear sign of early recovery. Online shopping will continue to perform well with expectations of a continued increase in quality logistic and distribution hubs popping up around the country in strategic locations.
And, with the next five years expected to deliver an average 32% increase in retail revenue from highstreets, retail parks and shopping centres – 79% of commercial property professionals think shops offer the best investment opportunity. 83% think warehouses and industrial properties will prove the best value for money investments by 2030, with 15% expecting revenue growth to increase between 21 and 30% over the period.