8/6/21 – Lease or buy commercial space?

Today’s BBC article ‘Five-day office week will become the norm again prompts us to consider future requirements for the commercial property market.  The debate continues around the flexibility offered by businesses in a combination of home and office working.  In the longer term, some businesses are hopeful that they will see staff return five days a week. With the benefits of being in the office, interacting with colleagues, sharing new ideas and information, an important factor.

Matthew Bowen, Director in our Commercial Agency team, looks at current trends in the commercial property market and predictions for the coming months.

“Where we have properties available for sale or to let, we are seeing a large disparity between the number of enquiries between the two options.

Enquiries to purchase are sometimes up to ten times as many as to take a lease. Whilst interest rates on lending do make purchases attractive the main cause we are hearing from interested parties is that it relates more with confidence in the medium and long term.

Often purchasers will take a longer-term view of their property needs and take space which is larger than they may need initially, however, tenants will look at the short and medium needs only.

This seems to have been exacerbated during the Covid crisis and as we exit this period, companies are looking to take leases often on shorter terms than previously or with more break options. This is to alleviate what they perceive as the risk going forward.

On property purchases, however, the risk is offset by still owning an asset and having options to let part out if the requirements of the company change. Going forward the result is likely to be an increase in sales where both disposal options are available but also where properties are not letting then the sale option becomes a viable solution.

The overall impact is likely to see more commercial properties change ownership and an increase in prices, higher than pre Covid, where vendors have an exit route and could cash in. An alternative disposal option where in previous difficult times, the market was relatively quiet.”

To talk to our Commercial Agency team concerning your current or future property requirements, please call 01727 843 232 or email Matthew Bowen direct at matthew.bowen@argroup.co.uk.