Demand for commercial property surges as interest rates drop

There has been a surge in demand to invest in commercial property compared with the same period a year ago, as interest rates drop following the second Bank Rate cut, according to the latest data from Rightmove.

The trend marks a continued recovery for the sector as opportunities become more affordable and attractive.

Demand is measured by enquiries to commercial agents about listings for lease, or to invest in, via Rightmove. The data for Q4 2024 shows that demand to invest in commercial property of all types was up by 28% by the end of last year, the biggest year-on-year shift since Q2 2021.

At a regional level, the biggest increases to invest in commercial property overall are the East Midlands and London.

The trend is led by the industrial sector, where Rightmove recorded record demand to invest in the sector. Demand for industrial listings to invest in was 72% higher than in Q4 2023.

Rightmove also recorded record demand within the industrial sector for leasing and is 31% ahead of the same three-month period a year ago.

After the industrial sector, the office sector has seen the biggest jump in investment demand versus the same period a year ago at 57%.

Demand to lease office space is up by 11% compared to the same three-month period a year ago, the biggest year-on-year jump since 2022, while supply is up by 2%.

Andy Miles, Rightmove’s MD of commercial real estate, commented: “Lowering interest rates have further fuelled the attractiveness to invest in commercial property after a couple of tough years for the sector. The industrial sector continues to lead the way, with the growth in e-commerce and online shopping turbocharging demand to both invest in and lease industrial space.”