Surge in demand for commercial property investment as interest rates ease, says Rightmove

The commercial property market is showing strong signs of recovery after a challenging period, according to new figures from Rightmove.

The commercial property market is showing strong signs of recovery after a challenging period, according to new figures from Rightmove.

The property portal’s latest Quarterly Commercial Insights Tracker reveals that demand for commercial investments of all types rose by 28 per cent in the final quarter of 2024, the largest year-on-year jump since mid-2021.

The industrial sector is driving the upswing, with a striking 72 per cent year-on-year surge in demand for investment. It also recorded record levels of leasing enquiries, now running 31 per cent higher than the same period last year. Experts attribute this ongoing momentum to a continued rise in e-commerce and online shopping, which has boosted the need for warehouse and logistics spaces.

Offices have seen the next largest jump in investment interest, up 57 per cent on the previous year. Demand for leasing office space has climbed by 11 per cent — the biggest year-on-year rise since 2022 — while supply is also up by 2 per cent, suggesting a renewed commitment by businesses to maintain or upgrade their workspace offerings.

The East Midlands and London saw the sharpest increase in overall commercial investment activity, although the trend extends Nationwide, buoyed in part by the Bank of England lowering interest rates for the second time last year, taking the Bank Rate to 4.75 per cent.

Andy Miles, Rightmove’s MD of Commercial Real Estate, says reduced borrowing costs have enhanced the appeal of commercial property, particularly in the industrial and warehouse market. Christian Smith of Savills notes an end-of-year uptick in enquiries and expects this momentum to carry through into 2025. He highlights ongoing strength in warehouses, logistics and manufacturing, as retailers continue shifting to online sales channels and businesses seek more modern, energy-efficient units.