Last year saw around £55bn worth of transactions in the UK’s commercial property sector, and 2018 is expected to achieve similar results as the market stabilises further.
According to real estate business Colliers International, commercial property transaction volumes should again exceed the £50bn mark this year, and the market will continue to attract significant investment from overseas investors, particularly Asia.
In London in particular, flexible working has really taken off in recent years, and this trend is expected to affect commercial property as landlords will need to adapt their spaces to provide options for this type of office environment.
International office space company WeWork, which transforms workplaces into dynamic, flexible spaces, is expected to grow to occupy as much as 3.5 million square feet in the capital.
Mark Charlton, head of UK research and forecasting at Colliers International, said: “Property performance is likely to moderate in 2018 as pricing remains pressured and rental growth modest, but on the up-side, the market will become less volatile, offering attractive, stable returns for investors.”
According to Tony Horrell, CEO UK & Ireland at Colliers International, investors from overseas will continue to target London for “large lot size trophy assets”.
He added: “Development activity in London, alongside the development potential in the regions, will bring new Grade A product across sectors that will help to drive capital activity in 2018.”
The prediction that London could lose out to non-core locations and regional markets is popular across the industry.
“The trend for international investors seeking out opportunities outside of London is likely to continue and evolve as the search for value and yield pushes investment to the regions, further driving development activity,” said Horrell.