UK Commercial Real Estate in 2024: What Won't Happen

 |  23 January 2024

UK Commercial Real Estate 2024 Building images

2023 posed challenges due to persistent inflation and soaring interest rates, leading to decreased investment volumes which hit a decade low. Yet the outlook for the UK’s commercial real estate in 2024 appears promising. Inflation is trending downwards, central bankers led by the Federal Reserve are talking-up multiple rate cuts and for now at least, employment markets remain buoyant. These shifts hold promise for occupiers and investors, and opportunity for those ready to take advantage. 

The Macro Environment won’t see Bond Market Stability, CRE Pricing Relief, or Swift Inflation Reversal 

Bond markets experienced turbulence as 2023 drew to a close following the Federal Reserves’ announcement mid-December that it expects to make multiple rate cuts in 2024. Anticipation of rate relief has already hit equities with the US stock market beginning 2024 within a whisker of an all-time high.  

What could this mean for CRE investors? Structural concerns in some sectors including office may continue to dampen pricing, a looser monetary policy may bring relief to the tsunami of refinancing activity facing banks and investors alike. 

What about inflation? We are likely coming toward the end of the world's most inflationary period since the 1970’s, with headline consumer-price inflation in Britain falling to an annualised 3.9% in November – the lowest reading in more than two years. But the battle is not yet won; the Bank of England does not anticipate reaching its 2.0% target until late 2025. While Europe and the Middle East remain on a war-footing, and adjacent risks to supply chains remaining very real – further real-world disruptions to freight costs and energy could change the calculus again. 

Looking at the impact by Asset Class 

Office won’t see vacancy rates ease or immediate investment rebound 

The office sector grappled with rising vacancy rates, reaching 19.2% in Q3 2023 as commercial landlords continue to grapple with evolving working patterns in big cities. However, industry experts maintain that while outdated office spaces persist, the sector remains far from obsolete.  

CBRE forecast that liquidity in the office investment market will rebound when interest rates start declining in the latter half of 2024. Prime rental growth is anticipated in most UK markets, particularly for high-quality buildings in sought-after locations. Despite the first half of 2024 likely witnessing low investment volumes due to prevailing interest rate constraints, the second half is expected to show signs of improvement. 

Industrial won’t see a record breaking year

The industrial sector continues to exhibit resilience. While the post-pandemic surge in demand for inventory might be stabilising, Al Brooks from J.P.Morgan suggest that re-shoring and nearshoring efforts in manufacturing could present opportunities for growth. However, CBRE believe the market may undergo a polarisation, with prime assets holding appeal while secondary assets face greater challenges. 

Occupier demand for prime, high-quality warehouses is expected to drive price surges, particularly in London. However, moderate vacancy rate rises are projected, with market dynamics likely to maintain subdued investment activity compared to record-breaking years. 

Retail won’t see a major bounce back 

Retail sales are anticipated to remain subdued in 2024, with modest vacancy rate rises expected. The retail investment profile remains diverse, with Retail Parks maintaining popularity while other sub-sectors gain traction. Opportunistic investors eye segments of the retail market for rebased rents, higher yields, and potential medium-term capital growth. 

The Election won’t be a Silver Bullet 

The upcoming general election in the UK is poised to impact investor sentiment, with transactional activity anticipated to dip before the election but rebounding in the following months. Political dynamics and sustainability concerns are focal points, with expectations of beneficial tax changes and a continued shift towards energy-efficient assets. 


Navigating the 2024 UK commercial real estate market demands agility and strategic foresight. While challenges persist, opportunities arise amidst evolving economic, political, and market dynamics. The prospects for various sectors, including office, industrial, and retail, showcase nuanced trajectories, necessitating a tailored approach to capitalise on emerging opportunities while mitigating risks. As the year unfolds, a balanced blend of resilience and adaptability will be pivotal for stakeholders navigating the UK's CRE landscape. 

About the authors:

Scott Willson is the CEO of Forbury. A mathematical and creative mind, he applies logic to unlock performance and thrives on building culture and results. Challenging the status quo and building authentic customer value.

Michael Strudwick, Commercial Manager at Forbury, is an expert in detailed real estate modelling and always on top of what's happening in the market.

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