"It has been struggling since the start of the pandemic and the subsequent retreat from town and city centres, but now that additional economic uncertainty has been placed on top, the situation has worsened."
Sirius Property Finance analysed UK commercial property investment over the past six months, and compared it directly to investment over the six preceding months.
The research finds that in terms of money invested, the biggest decline has been seen in the industrial sector, falling by 55%. In the last six months, £2.9 billion has been invested, down from £6.9 billion in the six months before that.
Office space investment has declined by 55% in the past six months, driven by a 63% drop in investment outside of central London. Despite this, office space is still receiving the highest amount of total investment at £3.8 billion.
Meanwhile, retail & leisure has declined by 45%, with this decline being driven by a drop of 75% coming in shopping centre investment, followed closely by a 74% drop in leisure investment.
In terms of the number of transactions, offices have seen the sharpest decline, falling by 44%, driven by a 64% drop in central London.
Retail & leisure transactions have fallen by 40% with shop units enduring the most severe drop of 47%. Meanwhile, industrial transactions have fallen by 35%.
The average amount of money invested via each transaction has also fallen across the board. The biggest drop has come from the industrial sector, falling 35% from £22 million to £14.3 million.
The average investment made into office space has reduced by 19%.
For retail & leisure the decline is 8%. This, however, is only saved from being a more dramatic drop by a remarkable 194% increase in the average transaction amount put into shop units which has risen from £5.4 million to £15.9 million in the last six months.
Head of corporate partnerships at Sirius Property Finance, Kimberley Gates, commented: “It has been a difficult six months for the commercial sector. It has been struggling since the start of the pandemic and the subsequent retreat from town and city centres, but now that additional economic uncertainty has been placed on top, the situation has worsened.
"Looking forward, the commercial sector’s recovery is going to be dependent on taking a more contemporary approach to space. While industrial units are likely to return to strength due to the immovable presence of e-commerce, retail and offices need to adapt to modern sensibilities.
"Mixed-use space is important - living, working, and playing in one multifaceted building, for example - but so too is a more experiential approach to physical retail, providing shoppers with something more than online retail can provide. We’ve seen how successful this can be with Barnes & Noble in America, and beauty brand Sephora across mainland Europe.”
