Commercial outlook - Q3 2022

In August, NAEA Commercial agents reported the best outlook for the coming quarter was in the land and yards sector.

Capital value, rental levels and investor yields are all expected to rise by the majority of respondents.

Several factors have contributed to industrial buildings and land/yards bucking the trend on commercial property

Firstly—lack of supply. The growth of online retailing has also meant growth in the demand for storage and distribution units of all sizes to meet the needs of the larger online brands and the smaller distributors retailing through portals such as eBay and Amazon. 

This demand has had in turn a knock-on effect so that companies traditionally needing yard space have opted for pure yard spaces as opposed to industrial buildings with yards.

The worst outlook for Q3 2022 is for pubs and restaurants

With a large mismatch in supply and demand, capital values are expected to fall. Hotels are in a similar circumstance with rental levels expected to decrease resulting in negative expectations for rental yield change over this quarter. This outlook is a reflection of the influence of the cost-of-living crisis. With the public expected to cut back on unnecessary expenditures combined with rising fuel costs, the hospitality industry is likely to particularly struggle.

At the same time, take-aways may be slightly sheltered from the storm as individuals switch from eating out to eating at home. Capital values in the take-away sector are expected to hold, while agents anticipate a rise in investor yields.

Read the full report.

Walton Robinson