The commercial property market bounced back considerably last year, after investors pulled away from the industry during the pandemic.
Will Fulton and Kerri Hunter, investment managers for UK Commercial Property REIT, told UK Investor Magazine that people returned to the sector, looking to diversify their portfolio and earn an income again.
“Commercial property was one of the success stories of 2021,” they wrote, adding: “Over the past 12 months, industrial and logistics property has continued to thrive, driven by strong rental growth and high demand, again producing the best performance.”
This area saw returns of 36 per cent, while shopping centres lost five per cent. Retail warehousing also became a hit, thanks to the online shopping boom. In addition to this, premises linked with discount retailers performed well, as customers looked to slash their shopping bills.
UK Commercial Property REIT itself concentrated on investing in student accommodation, some industrial with value-add sites, and retail warehouses.
Looking ahead to the rest of 2022, the pair predicted the gap between different commercial assets is becoming smaller.
“The market has started to become less polarised,” Mr Fulton and Ms Hunter stated.
While the office sector is still “weak” due to flexible working arrangements, they noted prime office spaces are still high in demand, while secondary premises are experiencing a much lower interest.
They also stated that leisure assets and hotels have recently been weak, but “should see an improvement” during the remainder of the year.
According to Propertymark specialists, the care sector will fare well in 2022, including commercial space for PPE manufacturers, laboratories and research and development space.
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