A background pattern, diamond shapes fading out.

Menu

WEST MIDLANDS COMMERCIAL PROPERTY RETAIL INVESTMENT TRIPLES

Posted: 15th January 2025

Category: News

Author: Adam Rock

INVESTMENT in the West Midlands’ commercial property retail sector more than tripled in 2024 to more than £800 million, with leading economist Mark Berrisford-Smith describing the rise as giving some ‘reasons to be cheerful’.

Our data and analysis was collected as for our Market Insite 2025 report.

Amid a lacklustre economic backdrop in the West Midlands, our report revealed that its retail market flourished, growing from £254m in 2023 to £803m in 2024. Despite this 216% growth, overall commercial property investment in the region had dropped by nine per cent, sitting at £1.8 bn.

Elsewhere both industrial and office markets suffered, with investment decreasing by 54% and 75% respectively. Investment into industrial units more than halved between 2023 and 2024 from £1.3 bn to £615 m due to a lack of available stock, while office investment was only at a quarter of the year prior in 2024, shrinking from £283 m to £71 m, highlighting Investors view on subprime offices.

Otherwise, the West Midlands’ alternatives market grew 184% to £332m, reflecting investor appetite for Purpose Built Student and Rented accommodation.

The findings were revealed at our Market Insite event in Birmingham, attended by a range of industry professionals. Additionally, three further events took place in Nottingham, Derby, and Leicester to discuss investment in the East Midlands.

The events featured a speech by independent economist Mark Berrisford-Smith, formerly of HSBC, who said he was ‘optimistic that the UK’s economy will soon awake from its present slumber’.

Mark said: “The stage is set for three interest rate cuts in 2025, which will not only alleviate pressures on indebted businesses and households, but also reduce financing costs for those looking to boost investment. For many businesses, however, the bigger immediate challenge to growth is the downbeat mood of consumers.

Although the so-called ‘cost of living crisis’ is well behind us, people remain distinctly uncertain about the future, and so prefer to build up savings rather than splashing their cash. Yet at the same time it’s encouraging that there has been solid growth of capital spending by businesses during the past year or so, which may presage the long-awaited improvement in productivity. I’m also heartened by the recent change in tone by the government, with the Chancellor and others starting to talk up opportunities rather than just highlighting problems.”

Overall, apart from retail, commercial property investment levels across all sectors trailed the West Midlands’ five-year averages.

Adam Rock, our director and head of the Birmingham office, said: “Despite being below the national picture, the most dramatic slowdown that the West Midlands saw was in the industrial sector. That can largely be accounted for by a lack of available stock rather than investor pullback. As it stands there is still a sustained appetite in the sector, which, along with our strong industrial fundamentals, will carry us through 2025.

“It was the retail sector that really proved to be powerful in 2024 however, accounting for more than 44% of the year’s transactions. This was in part due to two retail parks purchased by British Land as part of a portfolio which made up £220m of the total investment, but nevertheless the sector as a whole paints an impressive picture.”

Adam said he was hopeful that Richard Parker, Mayor of the West Midlands, will continue to encourage private sector investment in the region.

He added: “Overall in our sector, despite a challenging first half of the year, prime yields began to stabilise around the midpoint and investment volumes have started to recover from this point, so we’re optimistic for 2025.”

To review the West Midlands investment breakdown, and the East Midlands commercial property data download Innes England’s Market Insite 2025 report here:  https://innes-england.com/wp-content/uploads/2025/02/Market-Insite-Brochure-2025.pdf

ENDS