Demand for commercial property investment jumped in last quarter

There has been a significant surge in demand for commercial property investment, reflecting a marked recovery in the sector, according to a new report from Rightmove. The platform attributes this rise to recent interest rate reductions by the Bank of England, which have made investment opportunities more affordable and appealing. Rightmove’s Quarterly Commercial Insights Tracker, which monitors supply and demand trends among the UK’s largest commercial property audience, revealed that overall demand for commercial property investment increased by 28 percent year-on-year in the final quarter of 2024. The office market also witnessed a notable increase, with demand for office space investment climbing by 57 percent year-on-year.

This marks the most substantial annual shift in demand since the second quarter of 2021. The East Midlands and London saw the most pronounced growth in demand for commercial property investment, with the industrial sector leading the way. Investment demand for industrial properties surged by an impressive 72 percent compared to the same period last year. Meanwhile, the office market also witnessed a notable increase, with demand for office space investment climbing by 57 percent year-on-year.

The strong performance of the industrial sector has been attributed to the ongoing boom in e-commerce and online shopping, which continues to drive demand for industrial space. Rightmove also recorded a 31 percent rise in leasing demand within the industrial sector, further underscoring the sector’s resilience and growth.

Meanwhile, the office sector has demonstrated notable recovery as well. Demand for office space leases rose by 11 percent year-on-year in Q4 2024, marking the largest increase since 2022. This growth reflects the return of some employees to physical offices, although the sector is still grappling with ongoing shifts in working patterns. Supply of office space also saw a modest increase of 2 percent over the same period.

Rightmove’s managing director of commercial real estate, Andy Miles, highlighted the impact of lower interest rates on investor confidence. “Lowering interest rates have further fuelled the attractiveness of investing in commercial property after a couple of tough years for the sector,” he said. “The industrial sector continues to lead the way, driven by the growth in e-commerce and online shopping, which has turbocharged demand for both investment and leasing.”