Commercial outlook - Q3 2022

According to NAEA Commercial agents' reports in August, the land and yards sector has the most promising outlook for the upcoming quarter.

The majority of respondents anticipate an increase in capital value, rental levels, and investor yields.

Several factors have contributed to the strong performance of industrial buildings, land, and yards within the commercial property market.

Firstly, there is a notable lack of supply in this sector. The rise of online retail has resulted in a growing demand for storage and distribution units of various sizes, catering to both larger online brands and smaller distributors operating through platforms such as eBay and Amazon. 

This increased demand has had a cascading effect, causing companies that traditionally required yard space to opt for dedicated yard spaces rather than industrial buildings with yards.

The worst outlook for the third quarter of 2022 is observed in the pubs and restaurants sector

The significant disparity between supply and demand is expected to lead to a decline in capital values. Similarly, hotels face a similar situation, with anticipated decreases in rental levels and negative expectations for rental yield changes during this quarter. This outlook reflects the impact of the cost-of-living crisis. As the public is expected to reduce unnecessary expenditures and face rising fuel costs, the hospitality industry is likely to face particular challenges.

However, take-away businesses may experience some resilience during this period as individuals shift from dining out to eating at home. Capital values in the take-away sector are expected to remain stable, while agents anticipate an increase in investor yields.

Read the full report.