What’s the outlook for commercial property in 2020?

Commercial Property

As Government regulations have made it more difficult to make a profit as a residential landlord over the past few years, commercial property investment has become a more attractive option. Whether you're considering doing it as a self-invested personal pension (SIPP) or a new business endeavour, here's what you should know about the state of the market in 2020.

A price rebound in London signals higher rental yields 

2019 was largely a difficult year for London's commercial property market, but much of that changed in Q4. Estate agents Knight Frank noted a 15% rise compared to Q3 – worth nearly £2.8 billion in real terms. As the amount of office space in London has dipped year on year since the 2015 referendum, demand is outstripping supply, with more than half of all the offices being built currently under offer. The likelihood that rents will continue rising is good news for people looking for SIPP commercial property, as it could prove highly lucrative.

Political certainty likely to prove positive for investors

Will Matthews at Knight Frank sees the Conservative landslide as a good sign for commercial property this year, commenting that "there is a great deal of pent up demand for commercial real estate that just needs a bit of certainty to be realised." Now that the path towards Britain leaving the European Union seems more clear cut, businesses can start to put plans in place.

However, some caution should be exercised

While there are many positive signs for commercial property this year, it's worth bearing in mind that nobody quite knows what Brexit is going to look like. Depending on the deal Britain gets, it could affect numerous small business owners across the UK. Commercial landlords should plan ahead in case their tenant's business fails. Most important of all, landlords should ensure that the lease has the necessary forfeiture clause in case of non-payment.

If you do encounter any issues down the road with commercial property rent arrears, Dukes Bailiffs can offer advice and solutions that not only get you paid, but help to retain your tenant, too.