Economic turmoil hammering commercial property, agents warned

The UK commercial property estate agency market is predicted to shrink this year as economic turmoil frustrates an industry that was finally starting to show signs of strong post-pandemic recovery, research from Sirius Property Finance reveals.

The debt advisory specialists analysed the annual revenue of the UK’s commercial estate agency market since 2013 to see how it has performed over the last decade and what that might mean for the future of agents who operate outside of the residential sector.

PEAKED

The data shows that the commercial estate agency market peaked in 2019 when, after enjoying annual growth of 21.2%, market revenue hit £7.3 billion.

In the same year, the number of businesses operating in the commercial agency space increased by 32.1% to reach 7,549, showing that confidence and expectation in the UK’s commercial space was high.

Then the pandemic struck, shrinking the commercial agency market with annual revenue falling by -4.4% in 2020 before falling by another -12.8% in 2021.

Despite this 2022 saw growth of 14.9% as revenue exceeded £7 billion and hit its highest point since the pre-pandemic peak. The number of agents also increased by 4.1% in the same year.

DECLINE

But forecasted figures point towards a revenue decline of -5.6% in 2023 although the number of businesses operating in the space is expected to rise by 2.3%.

Kimberley Gates, Head of Corporate Partnerships at Sirius Property Finance, says: “The rejection of high street shopping and office-based working creates an existential crisis for the industry.

“Throw a heightened level of economic uncertainty into the mix and you’ve got a difficult period for the market to navigate.

“But while the short-term outlook isn’t great, we don’t expect the decline in commercial sector activity to be long lived.

“This dip will very soon reverse itself and commercial agents will see an uptick in revenue.”