There are early signs that the UK commercial property market is regaining its mojo. An increase in investment at the end of 2021 points towards a much healthier year ahead and, crucially, what sectors will be driving this forward momentum.

According to the latest CBRE Monthly Index, the commercial property market experienced a notable bump in December, with values up by a record 3.7%. Value growth for the overall year was reported at almost 14%. This movement has led to forecasts of a return to pre-pandemic levels.

Which sectors will drive commercial property market growth in 2022?

Central to the outlook is the performance of the industrial property sector and in particular the warehousing and distribution units segments. E-commerce is driving demand for industrial space. With online shopping behaviour now firmly embedded and the Omicron variant still having an impact, the focus on this sector is set to remain strong as investors look to benefit.

Student accommodation continues to be a steady pair of hands. Written off by many in the immediate wake of the pandemic outbreak, the sector has performed defied these predictions and performed steadily. This reliability looks set to continue in 2022.

Where is the potential in hard-hit high-street retail market?

Elsewhere in retail the picture is more mixed. News that retailers are bracing for a difficult 2022 after a poor Christmas and new year period suggests that the high street’s struggle will continue. The Omicron variant is keeping shoppers at home and hit sales at the end of 2021 and beginning of 2022, including key festive and sales spending.

As such, the direction of the high-street retail property market remains to be seen, but the continued slump in sales could drive the trend for the repurposing of retail units for residential and leisure purposes. Build-to-rent could be a notable beneficiary, in particular relating to city centre properties, with significant activity in this area of late.

The role of the office space sector in the revival of the commercial property market is the subject of significant debate. While the lifting of working-from-home guidance has sparked some optimism, with commuters beginning to return to offices, growth in this market is likely to be slow, not least as remote working is now embedded in corporate culture, from 80/20 time splits to more larger allowances.

Why access to funding will be key to investment opportunities in 2022

The early optimism about market conditions is a welcome sign for commercial property investors, but the sector continues to hold challenges. Some segments are set to perform significantly better than others and it is this analysis that should guide investment activity.

Amid such market conditions, accessing capital will be key for investors. Flexibility and ease of access will be crucial to taking the right opportunities. This is why it is important to have a commercial loan and mortgage lender that provides access to all available funding options.

To find out more about A&T Business Associates services for commercial property investors, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.