Mike Storey, head of professional services at Brown&Co St Neots, gives his analysis of the commercial property market. 

Demand for industrial units has been relatively strong for some time but has dropped from the peak achieved during lockdown.

During the lockdown period, the routes for potentially successful investment were somewhat restricted. The retail, most leisure and commercial sectors were essentially in a hiatus, leaving industrial as the one area still in demand.

During this period locally, we have seen rents exceed £9 per sq ft and some yields at 5% and below. This was not sustainable, especially as other sectors began to re-open.

Retail is changing and in local town centres, we are seeing a return to units being leased to local retailers as a dominant force, although there are still a few larger players in the market.

The Hunts Post: Mike Storey, head of professional services at Brown&Co St NeotsMike Storey, head of professional services at Brown&Co St Neots (Image: Brown&Co)
Leisure has re-opened but is still relatively fragile. The commercial market is still suffering from the high impact of home and hybrid working.

However, the opening up of these sectors has seen a softening of industrial rents and yields. Subsequently, we have seen yields soften by circa 0.5% and rents fall to nearer £7-£7.50 per sq ft.

With these changes, the market is now relatively stable, but there are still external factors in play that may have an effect. These include the wars in the Middle East and Ukraine, and the impact on global fuel prices and economic stability.

Add to this the cost of living generally, the rate of inflation (which is starting to show signs of easing), the scope for a weakening performance in the US in the commercial property funding market and equally, the weakening of the Chinese economy.

You can contact Mike Storey at Brown&Co in St Neots on 01480 479071.