East Midlands sees £1.2bn in commercial property investments in 2023
Despite a challenging economic climate, the commercial property market in the East Midlands demonstrated resilience, attracting nearly £1.2bn in investment last year, according to a recent report.
Innes England’s Market Insite 2024 report highlighted that despite a 12% decrease compared to the previous year and a 20% dip from the five-year average, the region fared relatively well.
This contrasts with the national scenario, where commercial property investment activity is estimated to have declined by 39% in 2023, with an overall projected investment of around £37bn.
At the recent Market Insite event hosted by Innes England in Nottingham, key insights into the Midlands’ commercial property market were unveiled.
Ben Robinson, Innes England director and head of investment said: “The strong headwinds of high-interest rates translating to high borrowing costs, inflationary pressures and geopolitical uncertainty have caused many investors to slow down or pause decisions to buy and sell. As expected, the region was dominated by the industrial market, and although investment volumes were largely flat compared to last year, at £734m, the sector accounted for 62% of all activity.
“Surprisingly, industrial volumes now trail the five-year average by more than 20%, which is probably more indicative of a lack of stock than any cooling of investor appetite in this sector. Retail was the next most active sector, at 22% of market activity, with volumes increasing by 38% to £262m with office investments largely flat at £84m.”
One notable finding was the changing investment landscape.
While traditional sectors like offices and retail remained stable, there was a sharp decline in the ‘alternatives’ market. Investment volumes in this segment dropped by 68% compared to the previous year, signalling a shift in investor preferences.
In Leicestershire, Realterm US made a significant investment of £29.75m in a Tesco distribution facility in Hinckley, highlighting confidence in logistics assets.
Derby saw noteworthy transactions including Realty Income Corporation’s £18.5m purchase of a B&Q property and Starboard Hotels’ £14.4m acquisition of Derby Riverlights leisure park, showcasing interest in diverse real estate opportunities.
Nottinghamshire witnessed Brookfield Asset Management’s £88m acquisition of a former Wilko distribution centre in Worksop, indicating institutional investor interest in strategic logistics hubs.
Matt Hannah, managing director of Innes England, said: “The industrial market has continued to deliver strong results with good occupier demand and rising rents across the region generating confidence for investors and developers to support new supply. Looking at the bigger picture, all property investment volumes reflected a lack of activity in the market and investor confidence needs to improve to drive more activity across the region. As always, our team has done an incredible job of collating the data. We are looking forward to 2024 and what that brings as we continue to expand our team in both the East and West Midlands.”
