Retail property investment rises as interest rates fall

A revitalised commercial property market is witnessing an upswing, with retail investment leading the charge, Rightmove reveals.

It says that enquiries to agents about retail property listings have rocketed by 35%, compared to the same period last year.

That’s a stark contrast to the 15% decline seen last year.

High-street retail, a cornerstone of the sector, is experiencing even stronger growth, with investment interest soaring by 56% compared to the same quarter in 2024.

That marks the highest level since 2021.

Industrial sector growth

Andy Miles, Rightmove’s managing director of commercial real estate, said: “The growth of the industrial sector has been one of the main stories so far this year, but we can see a resurgence to invest in retail and office space too.

“Rate cuts are helping investment into commercial property, and after a period of decline it appears that retail and office spaces are becoming more attractive to invest in.”

The resurgence in the retail property follows a period of stagnation, with investor enthusiasm for retail properties subdued since 2022.

The Bank of England’s decision to lower the Bank Rate for the second time this year in May has been a pivotal factor in this revival, Rightmove says.

The improved interest rate environment has boosted confidence, driving a 20% increase in overall commercial property investment demand compared to the second quarter of 2024.

Meanwhile, a 4% drop in available retail properties since last year has intensified competition for listings, further fuelling demand.

Interest in physical retail spaces

Businesses are also showing renewed interest in physical retail spaces, with a 10% rise in demand to lease these properties.

This growth is despite the ongoing expansion of e-commerce.

Beyond retail, the office sector is also rebounding with interest rocketing by 65% compared to last year.

The property platform says that’s a dramatic turnaround from the 13% drop recorded last year.

Office space demand rises

Demand for leasing office spaces has grown by 12% nationwide, with London seeing a 14% increase.

Key areas like Westminster and the City of London have reported even sharper rises, at 29% and 21%, respectively.

Ongoing debates over in-person, remote and hybrid working models continue to shape the market.

The industrial sector demand has more than doubled, up 105% from last year, while leasing demand has climbed by 41%, underscoring the sector’s robust appeal.

Appetite for office and retails spaces

NAEA Propertymark’s commercial advisory panel board member, Michael Sears, said: “It is positive to see a rejuvenated appetite regarding investment within the retail and office space sectors, especially considering habits have shifted significantly in recent years.

“Online commerce fundamentally changed how people shop in many cases, and the pandemic accelerated the home working revolution.”

He adds: “However, these figures are the highest they have been since 2021 and show that there is still a healthy desire for high-quality retail space across the UK and that many employers are also finding a new balance for their office space requirements that complements hybrid working arrangements with their colleagues.

“These factors added together are a positive sign of a high street resurgence in many regions.”

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