A market assessment by debt advisory firm, Sirius Property Finance, has disclosed a striking resurgence of commercial rents across Britain, noting a 9.7% annual surge. This comes after a preceding downturn, where rents had dipped by -2.9% between 2021 and 2022.
Sirius Property Finance embarked on a comprehensive analysis of contemporary commercial rents across every British region, exploring their progression over time.
Presently, the average commercial rent stands at a substantial £1,036 per week, showing a 9.7% increase compared to the same period the preceding year. This transformation overthrows the earlier declining pattern, where commercial rents had shrunk by -2.9% from April 2021 to April 2022.
Significantly, the typical commercial rent presently being procured across Britain is 42% higher than the pre-pandemic market values.
The North West region has been a standout, witnessing the most substantial upswing in commercial rental values over the past year, with a remarkable 88.7% increase.
Meanwhile, commercial rents have shot up 40.8% annually in Wales. The North East and the East of England have also posted considerable growth, at 39.2% and 21.6% respectively.
Other regions like Yorkshire and the Humber and the South West have seen increases, though at a relatively lesser magnitude of 5.3% and 3.6% respectively.
However, not every region in Britain has shared in this resurgence of commercial rental values. The South East, for instance, has suffered a -18.4% decline, with the West Midlands (-14.6%) and East Midlands (-12.9%) also experiencing a double-digit reduction since the previous year. Similarly, London (-4.6%) and Scotland (-2.6%) have registered a less severe reduction in commercial rental values.
Yet, these strong indicators of robust positive growth are expected to be a positive sign for the sector, potentially revitalising investor confidence, which took a hit as the commercial sector investment dipped, primarily driven by a decline in industrial investment.
Nicholas Christofi, Managing Director of Sirius Property Finance, said:
“Just as the commercial sector seemed to be recovering from the pandemic’s impact, it faced further turmoil due to the economic uncertainty that has plagued Britain in recent times.
Nevertheless, there are some exceptionally positive signals emerging from the rental values achieved in many parts of the UK, as well as the strong growth they’ve demonstrated in the last year.
In this regard, the commercial sector has not merely recovered from its pandemic-caused recession, but it has surpassed the pre-pandemic benchmark, with commercial rents now higher in every region, barring three when compared to 2019.
Given the recent decline in commercial property investment, this strong growth should reassure investors about the significant opportunities still presented by the commercial sector and the continued profitability of commercial rentals.”
