UK Commercial Real Estate Market Size
| Study Period | 2020 - 2029 |
| Base Year For Estimation | 2023 |
| Market Size (2024) | USD 149.67 Billion |
| Market Size (2029) | USD 184.80 Billion |
| CAGR (2024 - 2029) | 4.31 % |
| Market Concentration | Low |
Major Players
*Disclaimer: Major Players sorted in no particular order |
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UK Commercial Real Estate Market Analysis
The UK Commercial Real Estate Market size is estimated at USD 149.67 billion in 2024, and is expected to reach USD 184.80 billion by 2029, growing at a CAGR of 4.31% during the forecast period (2024-2029).
- High inflation is putting more pressure on companies to cut costs, prompting them to focus on increasing productivity and reducing costs. More than seven in ten (75%) respondents to the Quarterly Industry Survey (Q3 2023) of the Research, Information and Consulting Society (RICS) predicted that corporate cash flows would continue to deteriorate over the next 12 months. This, combined with the long-term effects of the “work from home” revolution, means many companies are still evaluating their real estate footprint – though the extent of downsizing is very business-specific.
- According to Remit Consulting, office occupancy levels stabilized at around 30% over the past year, and a three-day workweek appears to be the new norm. However, there needs to be more evidence for any long-term changes in office attendance. Employee demand for hybrid working continues to grow. For instance, according to a recent Remit Consulting survey, 69% of staff say they enjoy working from home, but almost 60% say they would consider quitting if they were required to work from home. Similarly, a Deloitte study found that more than 75% of the Gen-Z generation would consider looking elsewhere if asked to go back to the office five days a week.
- While corporate real estate is second only to salaries for many companies, the need for high-quality space continues to drive recruitment, retention, productivity, and staff health and well-being. This is why there continues to be a strong need for high-quality space.
- Due to a combination of evolving occupier needs and legislation, the overall amount of office space required will be lower in the future, with a greater emphasis on high-quality buildings meeting these corporate and regulatory needs. Life sciences and technology have played a key role in sustaining market growth. New technologies such as AI will further enhance the importance of offices as a high-quality environment.
UK Commercial Real Estate Market Trends
Office Segment Showing Significant Growth in the Market
- In 2023, there was a strong flight to quality, with demand far outpacing supply. This was partly due to occupiers utilizing their buildings to draw in employees into a hybrid working environment, and it is anticipated that this trend will continue into 2024 and the coming years.
- The increased demand for high-quality space has exhausted the development pipeline, with 38% of the UK office space projected to be occupied by occupiers by 2025. As the pipeline continues to deplete, there will be increased competition for the highest-quality buildings, resulting in higher rents at the premium end.
- At the top end of the market, rental growth is expected in 2024 across all UK office markets. The full-year forecast for rental growth is 3% in most UK markets, continuing the strong growth seen last year.
- In most markets, new record headline rents were achieved in 2023, and this is expected to continue in 2024. Buildings in prime locations with high-quality amenities and outdoor space are expected to register extremely high rental growth in 2024.
Retail Segment Expanding Rapidly
- Retail sales are expected to remain muted in 2024. Some retailers will continue to expand, while trading conditions will remain difficult with modest increases in vacancy rates. Retail investment will continue to diversify, with retail parks continuing to be the go-to option for many. However, the recent growth in other sub-sectors will continue in 2024.
- UK retail sales volumes remained lower than in 2019 throughout 2023. The subdued performance is expected to persist this year, with significant growth expected to return later in the year.
- Retail online penetration has returned to the trend of the years before the pandemic (2015-19). Based on projections of the drivers of online penetration, it is anticipated that there will be moderate growth to reach 28% by the end of this year.
- Profits are expected to take a hit in the coming year as occupiers continue to push consumers to use their physical stores as much as possible to increase profitability. For some, expansion is likely, although the emphasis will be on more ‘safe’ spots. With trading conditions expected to remain difficult in the coming year, there will be a slight increase in the vacancy rate.
- Pricing in the retail sector was expected to remain competitive compared to other commercial sectors in 2022. While retail parks will continue to be the preferred option for many consumers, there will continue to be an appetite for grocery stores and shopping centers.
UK Commercial Real Estate Industry Overview
The commercial real estate market in the United Kingdom needs to be more cohesive due to a low level of market share concentration. The industry is highly competitive. The UK property market is extremely attractive to investors at the domestic and international levels. Property tech is a growing sector in the country, as it is easier to invest, buy, and sell than the usual process. Some players in the market are Land Securities Group PLC, Segro PLC, British Land, Derwent London, and Hammerson.
UK Commercial Real Estate Market Leaders
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Land Securities Group PLC
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Segro PLC
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British Land
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Derwent London
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Hammerson
*Disclaimer: Major Players sorted in no particular order
UK Commercial Real Estate Market News
- October 2023: British Land received a resolution to grant planning permission for an approximately 140,000 sq. ft multi-level last-mile logistics scheme on Mandela Way, Southwark. This project represents the latest addition to British Land’s 2.9 million sq. ft pipeline. Situated near the junction of New Kent Road, Old Kent Road, and Tower Bridge Road, the site will serve as a last-mile logistics hub for Southwark and central London.
- July 2023: British Land and Landsec formulated a comprehensive set of recommendations aimed at regenerating UK towns and cities. Their goal is to stimulate more growth, create additional homes, and generate more job opportunities by enhancing how the planning system supports brownfield regeneration. As major players behind some of Britain’s most significant regeneration projects, including Landsec’s 24-acre Mayfield neighborhood in central Manchester and British Land and AustralianSuper’s 53-acre Canada Water development in London, these property companies bring extensive experience in large-scale, complex urban developments. The insights gained from such projects have been applied and refined in their latest paper.
UK Commercial Real Estate Market Report - Table of Contents
1. INTRODUCTION
- 1.1 Study Assumptions
- 1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET INSIGHTS
- 4.1 Current Economic Scenario and Consumer Sentiment
- 4.2 Commercial Real Estate Buying Trends - Socioeconomic and Demographic Insights
- 4.3 Government Initiatives and Regulatory Aspects for Commercial Real Estate Sector
- 4.4 Insights into Existing and Upcoming Projects
- 4.5 Insight into Interest Rate Regime for General Economy and Real Estate Lending
- 4.6 Insights into Rental Yields in Commercial Real Estate Segment
- 4.7 Insights into Capital Market Penetration and REIT Presence in Commercial Real Estate
- 4.8 Insights into Public-Private Partnerships in Commercial Real Estate
- 4.9 Insights into Real Estate Tech and Startups Active in Real Estate Segment (Brokerage, Social Media, Facility Management, and Property Management)
- 4.10 Impact of COVID-19 on the Market
5. MARKET DYNAMICS
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5.1 Drivers
- 5.1.1 Growth in the Country's Logistics Sector and Warehouse Space
- 5.1.2 Increasing Demand for Co-working Office Spaces
- 5.1.3 Increasing Infrastructure Investments
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5.2 Restraints
- 5.2.1 Rising Costs affecting the market
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5.3 Opportunities
- 5.3.1 Life Sciences and Tech Hubs driving the market
- 5.3.2 PropTech and Innovations in the Industry driving the market
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5.4 Industry Attractiveness- Porter's Five Forces Analysis
- 5.4.1 Threat of New Entrants
- 5.4.2 Bargaining Power of Buyers/Consumers
- 5.4.3 Bargaining Power of Suppliers
- 5.4.4 Threat of Substitute Products and Services
- 5.4.5 Intensity of Competitive Rivalry
6. MARKET SEGMENTATION
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6.1 By Type
- 6.1.1 Offices
- 6.1.2 Retail
- 6.1.3 Industrial and Logistics
- 6.1.4 Hospitality
- 6.1.5 Other Types (Schools, Recreational Areas)
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6.2 By Key City and Region
- 6.2.1 England
- 6.2.2 Wales
- 6.2.3 Northern Ireland
- 6.2.4 Scotland
- 6.2.5 London (City)
- 6.2.6 Rest of United Kingdom
7. COMPETITIVE LANDSCAPE
- 7.1 Market Concentration
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7.2 Company Profiles
- 7.2.1 Land Securities Group PLC
- 7.2.2 Segro PLC
- 7.2.3 British Land
- 7.2.4 Derwent London
- 7.2.5 Hammerson
- 7.2.6 Capital & Counties Properties PLC
- 7.2.7 Shaftesbury PLC
- 7.2.8 Tritax Big Box Reit PLC
- 7.2.9 Unite Group PLC
- 7.2.10 Wayhome
- 7.2.11 AskPorter
- 7.2.12 Landbay
- 7.2.13 Thirdfort
- 7.2.14 RentProfile*
- *List Not Exhaustive
- 7.3 Other Companies
8. FUTURE OF THE MARKET
9. APPENDIX
** Subject To AvailablityUK Commercial Real Estate Industry Segmentation
Commercial real estate is a property used exclusively for business-related purposes or to provide a workspace rather than as a living space. Most often, commercial real estate is leased to tenants for income-generating activities. In general, it includes buildings used for commercial purposes, including office buildings, warehouses, and retail buildings (e.g., convenience stores, 'big box stores, and shopping malls).
The UK commercial real estate market is segmented by type (office, retail, industrial and logistics, hospitality, and other types [schools and recreational areas]) and key city and region (England, Wales, Northern Ireland, Scotland, London [City], and the Rest of United Kingdom). The report offers market size and forecast values for the UK commercial real estate market in value (USD) for all the above segments.
| By Type | Offices |
| Retail | |
| Industrial and Logistics | |
| Hospitality | |
| Other Types (Schools, Recreational Areas) | |
| By Key City and Region | England |
| Wales | |
| Northern Ireland | |
| Scotland | |
| London (City) | |
| Rest of United Kingdom |
UK Commercial Real Estate Market Research FAQs
How big is the UK Commercial Real Estate Market?
The UK Commercial Real Estate Market size is expected to reach USD 149.67 billion in 2024 and grow at a CAGR of 4.31% to reach USD 184.80 billion by 2029.
What is the current UK Commercial Real Estate Market size?
In 2024, the UK Commercial Real Estate Market size is expected to reach USD 149.67 billion.
Who are the key players in UK Commercial Real Estate Market?
Land Securities Group PLC, Segro PLC, British Land, Derwent London and Hammerson are the major companies operating in the UK Commercial Real Estate Market.
What years does this UK Commercial Real Estate Market cover, and what was the market size in 2023?
In 2023, the UK Commercial Real Estate Market size was estimated at USD 143.22 billion. The report covers the UK Commercial Real Estate Market historical market size for years: 2020, 2021, 2022 and 2023. The report also forecasts the UK Commercial Real Estate Market size for years: 2024, 2025, 2026, 2027, 2028 and 2029.
What are the key drivers of UK Commercial Real Estate Market?
The key drivers of UK Commercial Real Estate Market are a) Growing demand for warehousing space and Last-mile logistics b) Rise in demand for flexible workspaces like co-working spaces and serviced offices
Commercial Real Estate in UK Industry Report
The United States property management market is witnessing significant growth, driven by an increasing demand for both commercial and residential rental properties. This surge is attributed to the availability of accessible, affordable, and high-quality properties in major city locations across the USA. Advanced technologies such as virtual reality, artificial intelligence, the internet of things, and machine learning are being integrated into property management, further boosting the market size. However, the market faces challenges such as increasing security and data breaches, as the software used by the largest property management companies in the US collects crucial and personal information of both clients and owners, making the real estate industry vulnerable to security threats. The market is segmented into software and services, with software dominating due to its ability to manage multiple property operational tasks. In terms of deployment, cloud-based software is leading the segment due to its advanced security and cost-effective solutions. The residential sector holds the largest market share in the property management market in the USA, with property managers being the dominant end-users. This analysis of the US Property Management market, including market share, size, and revenue growth rate, is provided by Mordor Intelligence™ Industry Reports. The analysis includes a market forecast outlook and historical overview. A sample of this industry analysis is available as a free report PDF download.
