Commercial Property Predictions 2024 – Part Two  


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Commercial Property Predictions 2024 – Part Two  

In the first part of this article we looked at some predictions relating to the commercial property market in 2024, covering areas such as office spaces, residential property and the retail sector.  

We also provided a brief précis of the wider economic outlook at the beginning of 2024, as extrapolating from the second half of 2023 and on to the rest of 2024 with any degree of accuracy is only ever going to be possible if the prevailing economic conditions (with reference to factors such as interest rates and inflation) are taken into account.

A major caveat, of course, when making or analysing predictions of this kind is that there are always likely to be unforeseen events able to impact commercial prospects, as recent years have demonstrated in the form of the COVID 19 pandemic, Russia’s invasion of Ukraine, the brief premiership of Liz Truss and the war in Gaza.

That aside, it is still useful to round up the opinions of experts in the commercial property field as a means of bringing the picture of future developments into sharper focus, particularly when, as was the case with the office space sector, the views of several experts start to coalesce around particular predictions.

In the case of office space, this meant a view that 2024 would see increased demand for premium rated buildings, with organisations keen to occupy the kind of flexible spaces that could attract and retain key employees, as well as helping them to burnish their green credentials. We have seen this with the lettings we are doing in Victoria.

In part two, we’ll take a further look at the commercial property sector and the predictions being made by authoritative voices in areas such as investment (which underpins much of the other activity being considered), rural land, logistics and the hotel and leisure industries.


One of the truisms which apply to commercial property investment in 2024 is that what goes down must eventually come back up again. In other words, the challenging nature of the investment landscape during the second half of 2022 and through all of 2023 – for reasons outlined in depth in the first part of this article – seems set to improve at least slightly as we move through 2024.

The principal reason for any improvement is the improving inflation picture which, as well as being advantageous in its’ own right, will hopefully see interest rates finally starting to come down from their current level in the second half of the year. Many commentators had been predicting more than one rate cut before any election call, but most now seem to feel only one is going to be possible.

This  should combine to drive a higher return on investment in the second half of the year, although the likelihood of improved performance isn’t uniform across the board.

Industrial and residential sectors are likely to benefit from the likelihood of rental growth and the fact that investors feel more emboldened to put their money in when the costs of borrowing are coming down and may fall further yet.

In the office and retail sectors, on the other hand, investment is likely to be more polarised, with premium quality assets able to attract levels of investment not available to less desirable properties.

Investors across all sectors will be keen to build up portfolios which are more sustainable, and market conditions since 2022 – the rise in running and borrowing costs – make it less likely that older building stock can be refurbished or repurposed to meet the kind of low carbon, eco-friendly standard more and more tenants or purchasers are likely to demand. This will push up the value of those investments which are in demand from organisations of every kind keen to both comply with incoming legislation and offer the kind of environmental, social, and corporate governance (ESG) consumers are increasingly demanding.

A side-effect of this could be the creation of a tranche of older and obsolete office and retail assets which may tempt investors keen to buy at the bottom of the market and repurpose and refurbish as costs become less restrictive.

Those investors who already have portfolios containing larger numbers of older assets of this kind may be forced to choose between disposing of them now for a somewhat reduced price or hanging on until conditions improve, which is likely to be toward the end of 2024 at the earliest.

Much of the direction of travel in terms of investment in 2024 is likely to be dictated – as set out above – by the general drive toward net zero and the demand for spaces which are designed with sustainability in mind.

The experts at CBRE predict that new standards on disclosure to be introduced during 2024 are intended to ensure that organisations direct their spending toward genuine efforts to introduce sustainable practices, rather than simply indulging in what is often termed ‘greenwashing’.

Over the course of 2024, the UK government and the Financial Conduct Authority (FCA) will make decisions on which new disclosure frameworks will become mandatory for UK listed companies. The thinking at CBRE is that IFRS1 (General Requirements for Disclosure of Sustainability-related Financial Information), IFRS2 (Climate-related Disclosures) and TPT (Transition Plan Taskforce) Transition Plans will become mandatory during the course of 2024, with reporting on the issues involved required during 2025.

If this is even partially correct then investors and occupiers will need to spend 2024 familiarising themselves with the requirements of these standards and putting in place systems to gather the resources and data needed to report accurately.

The introduction of new standards will mean that sustainability features such as improved energy efficiency become a routine aspect of the calculation of any asset value, and of the differences between more and less sustainable assets.

All of this may seem straightforward, but one aspect highlighted by the CBRE which may not have occurred to too many investors is that the condition and efficiency of the UK power grid will come to play an increasingly important role in investment decisions.

Renewable infrastructure investment will be heavily reliant on trusted grid capacity, which means that the condition and capacity of energy infrastructure will become yet another factor to weigh when making investment decisions.

Moving from an overview to more tightly specific observation, the experts at Savills produced a number of predictions based on a belief that the factors which drove prices down in 2022 and 2023 should start to improve during 2024.

They admit that it has historically been tricky to identify the bottom of any economic cycle, but are nonetheless confident that, in 2024 and 2025, in their words, ‘normal service will be resumed’. They also point out that the UK is one of 40 countries around the world which are due to hold elections during 2024, and this this has historically triggered a degree of uncertainty amongst investors.

Analysis carried out by Savills shows, however, that transactional activity may slow in the three months prior to the election date, but recovers over the following six months, meaning that any impact over a 12-month period is likely to be negligible.

Amongst the predictions they make are that logistics operations in the best locations offer excellent opportunities to buy in 2024 and sell into what they expect to be a rising market in 2026, and that food shops and locally focussed retail will be relatively affordable options at the start of 2024, with income streams driven by factors such as omni-channel retail and constrained stock supply. One of the areas they pick out as being particularly attractive for investors in 2024 is farmland.


The appeal of farmland as an investment in 2024 is related to the kind of global factors which had such an impact on the commercial property sector in 2022-23.

Shocks such as extreme weather around the globe and conflicts which impact supply chains, energy prices or both, mean that prime arable land for food production remains an asset which is likely to offer long-term capital growth.

The other aspect of the wider economic and social picture which makes investment in land such an attractive proposition for 2024 is the progress being made toward net zero carbon emissions.

At the time of the predictions being made, the supply of farmland in the UK was at 155,000 acres, the highest since Brexit, and the land in question can be utilised for several purposes depending upon the precise circumstances – from food production or development through to use in the energy or renewables sectors.

One emerging market within the rural sector is that driven by the fact that the types of regulation and disclosure mentioned previously with reference to sustainability within assets will start to be applied in the realms of nature and biodiversity.

From 12th February 2024, the Biodiversity Net Gain (BNG) regulation will be  in force. In simple terms, this regulation states that any new development must deliver a BNG of 10%, which means that the development in question should result in there being more or better quality natural habitat than was previously the case.

This somewhat abstract-sounding measure will, for the purposes of the regulations, be quantified in standardised biodiversity units. Developers will be able to enhance or restore biodiversity on site, within the boundary of a development, or through a mixture of on-site and off-site options.

The off-site option involves purchasing biodiversity units on the open market, and it is this option which might help to drive up the value of rural land, if the purchase of some of this land becomes a requirement of getting planning permission for major developments.

At the same time, the new Taskforce on Nature-related Financial Disclosure will be working to persuade organisations to direct investment toward those activities which are deemed to be ‘nature positive’.

Although this will be a voluntary framework initially, the same was true of the Taskforce on Climate-related Financial Disclosures (TCFD) on launch, but it is now mandatory for some companies in the UK.

Taken together, measures such as these help to create what might be termed an emerging ‘nature market’, in which farmland and/or forestry becomes increasingly attractive for investors.

For example, according to Savills, the average return on investment for a solar farm in the UK is currently between 10% and 20%. While a degree of certainty on the policy around developing renewables would be welcome (the current UK government having been felt to have backed away from a green agenda in the wake of perceived hostility to the 2023 introduction of the ULEZ scheme in London), it seems likely that, if a new government is elected in 2024, issues such as the widespread call for a ramping up of onshore wind provision in England will be on the agenda at the very least.

Looking at the prospects for rural land investment in-depth, Savills predicts that Grade 3 arable land will be in demand thanks to the fact that it is versatile enough to provide solutions for the emerging nature markets as well as to play a role in food production.


The continuing growth of ecommerce in the UK will help to maintain high levels of demand for prime logistics and warehousing assets, with locations in major urban areas – with close links to transport hubs – being able to demand the highest rental yield.

The pressure being put on supply chains by external forces, such as military action or extreme weather events, is likely to increase the demand for extra-resilient supply chains within the UK itself, and the logistics sector will play a major role in this.


Predictions for the hotel and leisure sector made by Colliers, forecast that investment in hotels would climb in 2024, as demand remains steady and operating costs slowly come down.

The expected drop in interest rates during 2024 is likely to see transactions in the hotel sector, which were stalled as rates rose in 2023, being carried forward into the New Year, something which will help the market in general to move.

At the same time, some hotel loans will reach maturity in 2024, and this could lead to some lenders placing pressure on borrowers. As a result, assets may be placed on the market, another aspect helping to make 2024 a better year for liquidity in the hotel real estate investment sector than 2023.