With the first quarter of 2017 behind us, we thought it would be a good idea to analyse the available data and see what the next few months may have in store.

Pall Mall Estates has seen a rise in demand, especially for our industrial units, but is that true of the whole sector - or simply due to our enticing, flexible-lease business model?

Let's find out! Here is a short overview of the main industry highlights from the first quarter of 2017.

Safe Haven

Despite the Brexit process being initiated, and a general election looming, commercial property investment has remained strong, actually gathering pace in some areas of the country. Foreign investors have been responsible for 84% of office transactions in London, trading property worth 5 billion pounds.

This shows no signs of slowing down. Indeed, Saudi-based family company Sidra Capital, have announced plans to spend a further 1 billion acquiring and developing UK commercial real estate.

It is worth asking - just why does Britain prove so popular to foreign investors?

There are mainly 3 attractive investment factors:

- The UK has a healthy government.
- Our legal system is robust and fair.
- Higher rental yields are available compared to the rest of Europe

Industrial Growth

According to just-published information by RICS, commercial industrial property is in strong demand across the UK, with pressure particularly being felt in the warehouse market.

When you also analyse the performance of UK retail real estate, it is clear that a pattern is beginning to emerge:

As industrial property demand increases, retail property demand weakens

This is due to the seismic shift we are seeing in the retail sector itself - more online purchases mean less need for physical selling space but an increase in demand for product storage premises. With customers continuing to buy online at record rates, this trend will continue throughout the year and beyond.

For industrial property investors this is great news - higher capital growth and rental yields are forecast. For property tenants it serves as a warning - act now to secure more favourable rents!

London Opportunities

Although significant non-domestic investments have occurred in London, the overall picture is a little mixed - there continues to be some investment rebalancing as a number of businesses look to expand outside the capital, with the Midlands and East of England favoured destinations.

This might however present an opportunity for companies that need or want to locate in the capital. General elections always cause an air of uncertainty, so combined with the mixed results of recent months, it could give prospective renters a bargaining chip to play with.

If you are looking for secondary commercial property in non- high profile locations, mark June 2017 as the time to open negotiations. You might come away with a good deal that will prove excellent value in a few years time.
Pall Mall Estates have a wide range of low cost commercial properties across the UK. Take a look at our available spaces here or get in touch with our experienced team here.

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