There is no doubt 2024 has proved a lot tougher than many invested in UK commercial real estate had been hoping for.
That has been principally a result of a lack of progress in the areas that have dogged activity in recent times. Decision-making has continued to be held up by geopolitical turmoil, higher-for-longer interest rates and sluggish macroeconomics. Lack of clarity on structural changes fundamental to real estate investment, such as the strength of the return to the office or to high streets, has not helped either.
CoStar News caught up with some of the leading real estate figures, picking through each of the sectors, to see what were the most important stories and themes, and review what they might mean for 2025.
It has been a fascinating year, packed with blockbuster deals that include a welcome return to big-ticket single asset retail acquisitions such as Landsec's acquisition of 92% of Liverpool One for £490 million, and major office moves driven by a preference for more sustainable, amenity-rich buildings such as Citadel's letting of British Land and GIC's 2FA in the City of London. Both of those market-moving transactions were revealed by CoStar News.
There has been a new government pushing plans to radically increase housing delivery and overhaul the planning system, and the year has seen a constant toing and froing in the debate as to whether activity is recovering or stalling, in lending, investment and occupation. The year has also been dominated by test cases for future development, with M&S's retrofit versus newbuild battle in Marble Arch perhaps the most headline-grabbing example.
Keith Breslauer, managing director at Patron Capital, says for opportunistic funds such as those he is involved with, a lack of certainty is the principal factor driving the market. "We need to create business plans and exit in four years to make that 15 to 20% gross return we aim for. The hardest thing to underwrite is the duration assessment associated with the exit. So many of the things we are buying have to demonstrate characteristics that will survive the extension of the business plan as the biggest risk is the fact that it takes longer.
"The second question mark in Europe really has been what is the role of domestic capital inside a country. What has changed is international capital has stayed home and there remains a question mark over when we will see increased flows between countries again. I am not sure, but that really ties back to business strategy duration."
Charles Ferguson-Davie, co-chief executive and chief investment officer at Moorfield Group, says that while the US and UK elections delivered decisive outcomes for Donald Trump and the Labour Party respectively, the outlook is still expected to be volatile and so global political instability remains a concern. "The policies from both sides of the Atlantic suggest that inflation will prove stickier than previously imagined and so a slower pace of interest rate cuts has been priced in. However, even before either election, real estate investors hoping for looser monetary policy to drive yield compression in the way it had the decade before were guilty of wishful thinking."
It has been no surprise that the continued drag on share prices has encouraged non-listed buyers to take advantage. It has been the year of the take-private, including Starwood Capital's £673.5 million acquisition of the Balanced Commercial Property Trust, the Goldentree-backed acquisition of Abrdn Property Income Trust, and to some extent Apollo's refinancing of £610 million of public bonds secured against Canary Wharf's shopping centre. Alongside that, the year has seen a series of huge mergers between listed companies as real estate groups bulk up to improve liquidity in their share prices and drive operational efficiencies. Many big names have become part of bigger organisations, notably LondonMetric's takeover of LXi REIT, NewRiver's merger with Capital & Regional and Tritax Big Box REIT's mega tie up with UKCM.
Richard Shepherd-Cross, fund manager at Custodian Property Income REIT, whose company was the focus of merger talks with Abrdn Property Income Trust, says it has been a year where making predictions has been difficult. "All year I have believed that 2024 will mark the bottom of the cycle for commercial property values in the UK. However, I confess I had expected a return to growth, driven by greater investor confidence and falling interest rates, to have got underway earlier in the year. Unfortunately, inflation proved more stubborn than forecast and the change in government, as well as the Budget, failed to deliver the expected stability that the market needed."
Nevertheless, as Chris Taylor, head of real estate and chairman of MEPC, says prices have got more competitive and predictable thanks to interest rates falling, however slowly. "UK real estate pricing has responded to the 'rapid normalisation of rates', with capital value declines most extreme for offices, while the living, logistics and life science sectors are seeing modest declines."
Taylor expects many institutional investors will seek to internalise operating models by buying specialist development management platforms. "This approach crucially affords the opportunity to fully integrate all environmental, societal and other related risks as part of an holistic approach to managing risk."
Jamie Ritblat, founder and chairman of Delancey, says that geopolitical instability has made the UK a more attractive location to place capital this year. But he argues that the approach of the new government both pre- and post-election, has not made that as easy a decision as "perhaps it could and should have been".
On a positive note he believes there is increased consensus the value correction in the UK market has moved far enough to invest in real estate at what they see as a more "appropriate" basis. "So, whilst there were a limited set of transactions earlier this year, the UK market overall has begun to show better signs of recovering investment volumes as we reach the tail end of 2024."
Despite the uncertainty, some markets did see stand-out performance, particularly at the most prime end.
Offices – stagnation and evolution
The stuttering lack of transactions, specifically larger ones, has disappointed the industry. Central London has seen few deals over £100 million for instance.
Nick Braybrook, head of London capital markets, Knight Frank, says December usually delivers up to 20% of a typical year's London investment turnover, while the fourth quarter as a whole averages around a third, so there remains plenty to play for.
"But with £5.5 billion traded so far this year, and £1.3 billion under offer, the market will need to motor into Christmas to exceed last year’s meagre total. That said, sentiment is much improved – there are many more buyers, but equally, vendors are getting more emboldened on pricing.”
Richard Garside, head of central London investment at Savills, agrees the London office investment market is clearly coming back. "Compared to 2023, there’s more capital circulating from a wider range of sources, US private equity remains busy, the UK institutions are back and there is more depth to bids’ processes, albeit there is still an element of caution from both buyers and sellers. We hope that 2025 will see an increase in larger lots trading, especially in the City, driven by the strength of the occupational market and increased appetite to exploit the value arbitrage while it remains.”
The occupier story has been more robust, particularly for the newest and most sustainable developments.
Delancey's Ritblat says the inherent demand for good office space, due to the occupational requirements some tenants have, has "also meant that London office occupational demand has, despite the doom-mongers, continued to be an important theme this year".
"We have seen, not surprisingly, that larger corporate tenants in search of an HQ have a new set of standards for their space needs and staff fulfilment, and this has clearly been reflected in demand for high-quality office space, particularly in Central London prime. Consequent on the past few years' challenges and pessimism, there is simply not enough appropriate space to satisfy that demand – and at that level of offering. We remain confident that, the rental growth in central London office we saw this year will continue."
Paul Williams, the chief executive of leading London office developer Derwent London, says that following the letting of its 25 Baker Street, the company decided to buy the remaining 50% stake in its proposed 50 Baker Street, W1, scheme from joint venture partner Lazari Investments for £44.4 million.
“The job was to secure planning permission,” said Williams. “We doubled the space to 240,000 square foot. We have a strong balance sheet to do the next stage of the development. The market has stabilised as of August.” Williams expects to let space at 50 Baker Street at £105 to £110 per square foot by 2028 and 2029 when the development is being delivered.
He said he hoped that the Bank of England would further cut interest rates, which would help valuations. Williams says there is a lot of equity for investments below £100 million. “We have seen a few big assets in the market. Banks are prepared to lend more, there’s definitely capacity there. Last year, the question was ‘can I get debt?’. This year, it is ‘how expensive is it?’.
Derwent London experienced first-hand the market was not quite ready for larger investments with the shelved sale of 90 Whitfield Street, a trophy office in London’s West End for which it was seeking £120 million, as reported. As with other vendors, the company is happy enough to wait in expectation of an improving market.
“We’ve still got some asset management play, and the [bidding] levels did not tempt us,” said Williams. “We’re happy to keep it. We might do more selling next year but we’re not under pressure to do so.”
Tristram Gethin, co-founder of Quadrant Estates, and a leading office developer, says the big thing for his company was finishing YY at Canary Wharf and letting a third of the building to Revolut in a deal revealed by CoStar News.
"We have had strong interest off the back of that. We are big believers in Canary Wharf. The fact that rents in the City are escalating up makes submarkets like Canary Wharf look more appealing. And Osmo down in Battersea [practically completed] in July this year in a market where we can offer hugely competitive deals to Victoria and the West End where there is a lack of supply. We have been pleasantly surprised at how busy London take up has been and how important best in space class has become and people are prepared to pay for it. To finally see rental growth come through has been encouraging."
There is, though, a lack of decent stock coming through for new opportunities, Gethin says. "There are reluctant sellers and very few opportunities about and unlocking opportunities is becoming more difficult. The result of the Budget has suggested interest rates will come down more slowly and there will be more inflation coming through. There are a lot of challenges but I am looking forward to 2025."
Joe Binns, head of investment, Stanhope, describes 2024 as the year of stagnation and inactivity. "Whilst the sentiment around London offices has materially improved from 2023, the gap between buyers and sellers has been too great to turn this positive mindset shift into transactions.
"In 2025 we are optimistic about a much more active market. The number of sales progressing at the end of 2024 has proven to vendors there is a strong appetite for the right product. We also expect to see a return to value-add investing, as buyers with higher return requirements are compelled to take on more risk to achieve the desired returns."
Binns says looking at the pipeline of offices coming to market in 2025, the focus remains on retrofit rather than rebuild. This is something that is reflected in Stanhope’s own portfolio with both Woolgate and 76 Southbank set to complete next year.
Lara Samworth, leasing director at Stanhope, adds that whilst “best in class” still reigns supreme, seeing significant rental growth over the year and commanding record-breaking premiums, the theme of 2024 has been location, location, location.
"Due to competitive tension driven by the continued strength of occupier demand and tightening supply of best-in-class space, occupiers, though still transient across London, have been forced to compromise on quality in order to stay within the core sub-markets."
In terms of the Greater London and South East market, Cushman & Wakefield national office agency head Charles Dady and international partner, says: "We expect office take up to reach 2.98 million square feet in 2024 across the South East, an increase of 20% on last year. The biggest deals this year include Johnson & Johnson at Tempo (97,000 square feet), Tui at 500 Capability Green (80,000 square feet), AWE at 250 Brook Drive (67,000 square feet), Surrey Council at 1 Victoria Gate (67,000 square feet) and Allwyn at Clarendon Works (65,000 square feet)." CoStar News revealed all of those lettings.
Dady says in terms of demand the average requirement size has been decreasing as a majority of occupiers reduce their real estate footprint to reduce costs and take better quality space.
He adds: "Our relationship with the office has changed more in the last three years than it did in the previous 30. Occupiers are still grappling with their return to office strategies following the pandemic and the drive to provide a better working environment to attract and retain staff.
"Those who are moving are taking on average a third less space than they had previously occupied but they are willing to pay more for it on a pound per square foot basis. On the landlord side, over the same period, developers and investors have faced the perfect storm of soaring inflation, interest rates and build costs which have led to the most significant downward shift in capital values since the GFC.
"In better news for developers and investors, falling supply levels and speculative development have prompted prime rents to rise by 25% on average since 2021. More growth is required, however, coupled with lower interest rates, for speculative development to become viable again in many sub markets.”
In terms of the wider large regional office markets there has been something of a return to form in the occupier markets. According to Avison Young's most recent Big Nine report, take-up had reached 2.2 million square feet in the third quarter of 2024, 34% higher than the previous quarter and only 4% below the 10-year average. Five of the Big Nine markets saw an increase in take-up, compared to the same period in 2023, indicating what it termed "a growing confidence in the market".
Birmingham (+46%), Cardiff (+9%), Manchester (+8%), all saw above-average take-up compared to the 10-year average. Avison Young points out that best-in-class space remains in high demand and short supply across the key regional city centres, which continues to drive record levels of rental growth.
As it often has done, Manchester has proved a standout performer. The Manchester Office Agents Society reports that the city centre recorded a strong third quarter as businesses took 432,619 square feet of office accommodation, meaning the city had registered 943,619 square feet of office deals. The third quarter accounted for 46% of that take-up thanks to some major city transactions, with Bank of New York Mellon letting 196,443 square feet at 4 Angel Square and Arm taking 68,860 square feet at No1 St Michael's.
Investment-wise, as with London and the South East, activity has been slower and difficult to predict. The prime yields for all Big Nine cities in Q3 reached a weighted average of 7.11%, after remaining unchanged since January 2024 at 6.94%, Avison Young reports.
Chris Cheap, principal and managing director, transactions, said: "As we move into 2025, the office sector shows positive signs, with regional office take-up increasing and prime stock being absorbed. As a result of this and a continued development viability gap, most of our regional markets are facing a period of undersupply and it is going to require innovation and public and private sector collaboration to keep the open for business signs up.
"Occupiers will continue to be drawn to office space which delivers an experience for their people and visitors whilst meeting carbon reduction obligations. This dynamic brings the need for significant upward pressure on rental values, with historic ceilings having to be broken to deliver a UK regional development cycle that meets the needs of the occupational market and in turn institutional investors."
Retail and leisure are the good news story at last
Retail and leisure real estate are increasingly moving on from the structural issues created by technology and the pandemic that are affecting occupancy in the office market.
Federated Hermes' Chris Taylor says the very best quality offices with outstanding amenities and accessibility alongside mandatory environmental standards are doing well while whole swathes of "stranded" assets require demolition or repositioning.
But he says that trend has already been played out across the retail market, with many high streets "ravaged by a combination of online sales, competition from out-of-town retailing and the impact of COVID on work patterns in town centres".
He says city-centre placemaking projects such as those completed by his MEPC and Hermes are bringing forward in King's Cross in London, Leeds, Birmingham and Manchester are now seeing strong performance and provide a perfect antidote for struggling high streets. "They are appealing to best-in-class corporates, attracted by community engagement, accessible destinations and propensity to attract talent." Taylor says these schemes benefit from the "halo effect" of being single-managed estates.
Ion Fletcher, director of policy, British Property Federation, says the retail sector has evolved again in 2024. "Consumer demand for experience-based leisure is helping to fill spaces in shopping centres and on high streets, while retail parks have demonstrated their resilience and are an appealing proposition to investors. The major challenge heading into 2025 will be costs. The business rates burden continues to be significant, despite retail, hospitality and leisure continuing to have some level of relief. We need business rates reform that decouples the level of tax from inflation and introduces annual revaluations."
He expects other legislation to have a big impact on the market next year.
"Mid-2025 will see a recommendation from the Law Commission on security of tenure under the Landlord and Tenant Act 1954, following a consultation launched in November. A relaxation of the current approach would enable property owners to more proactively curate the occupier mix in retail and leisure destinations and better reflect consumer demand, leading to more vibrant, thriving places. Regardless of the outcome though, partnerships between property owners and occupiers will continue to be vital to local economic growth and the creation of town and city centres where people want to spend time.”
Savills reports that in 2024, capital values surpassed the seven-year average, recording the highest levels since 2016, reaching £2.034 billion across 45 transactions. It says continuing this momentum, 2025 is shaping up to be an even more active year for shopping centre investments.
Mark Garmon-Jones, head of shopping centre and retail investment, says that since summer, investor sentiment towards retail has significantly improved, "bolstered by statements of intent from the likes of LandSec, as well as continued occupational uptick and rental growth".
"We have seen strong demand for retail warehousing and food stores, which has spread to the major shopping centre sales we are handling and market activity more generally. Demand for the best of best prime schemes and parks continues to climb.”
Hannah McNamara, co-founder of P-Three, says neighbourhood-driven growth has been reshaping the retail landscape over the last 12 months, particularly in London where areas like Battersea Power Station and Borough Yards have "transitioned from ambitious launches to established hotspots, while significant lettings in locations such as Elephant & Castle and East Bank at the Queen Elizabeth Olympic Park in Stratford continued apace".
She says this highlights a key trend. "While some retail struggles, well-conceived, well-executed districts are thriving." In addition she says 2024 has seen prime retail "truly broken away from the pack".
"While historically it was able to lift secondary and tertiary markets along with it, the void between these tiers has now widened dramatically. Even secondary spaces are struggling to attract footfall and tenants, while prime zones remain dominant."
In terms of her retailer picks during the year, she highlights: "Beauty and athleisure have dominated retail in 2024, driven by social media-savvy tweenagers. Sephora, Pure Seoul and Gymshark all enjoyed particularly strong traction as they are able to most effectively bridge the gap between digital influence and a physical presence. This blend of online engagement and in-store experiences will continue to shape the future of retail into 2025 and beyond."
Thomas Rose, her fellow co-founder, says creative reuse of buildings continues to unlock exciting new spaces, from Third Space gyms revitalising old department stores in Clapham and Richmond to Premier Inn converting basement car parks in Bloomsbury into hotels. "Adaptability is key.”
"Suburban London is thriving as restaurants pivot to target these markets with areas like Greenwich, Wimbledon and East Dulwich seeing highly competitive bidding for space. These hotspots and others benefit from hybrid working culture, which has created new opportunities for [food and beverage] operators to tap into localised demand outside traditional city centre hubs."
For Rose, rising costs and financial pressures defined 2024 for retail and especially leisure operators. "A change in government initially brought hope but Labour policies such as increased National Insurance and minimum wage hikes have added millions to operational expenses and have placed significant strain on already tight margins for many."
Mark Serrell, partner at Kenningham Retail, says 2024 has been another outstanding year from a central London retail property perspective, building on the strong foundations laid in 2023.
"In particular, Oxford Street has continued its revival as a leading retail and leisure destination with a wave of new retail brands taking space including TK Maxx, Jack Jones and Abercrombie and Fitch debut on Oxford Street, along with the introduction of some exciting alternative uses with the arrival of Moco Museum, Activate and Future Stores, demonstrating just how broad the leisure offer is on the street.
"Many of the Oxford Street developments under construction, due to be completed in 2025-26, are already showing significant demand from potential occupiers further bolstering the street's appeal. The green light for M&S’s redevelopment at Marble Arch will provide further stimulus."
Sam Cotton, head of asset management at Battersea Power Station, says the company hosted over 100 brand pop-ups and collaborated on innovative retail concepts in response to the demand from visitors for a more bespoke and interactive shopping experience in 2024, and that is not going to change next year.
He says brands are using physical spaces to revive the connection lost in online engagement. "At Battersea Power Station, for example, Aperol’s ‘Aperidisco’ this summer featured live DJ sets, karaoke and yoga sessions while IWC Schaffhausen created an immersive pop-up space to celebrate its 10-year partnership with Lewis Hamilton.
"At Battersea Power Station, we have an average dwell time of nearly two hours (113 minutes), indicating that visitors are engaging with a variety of offerings across the neighbourhood."
Allan Lockhart, chief executive, NewRiver REIT, which bought peer Capital & Regional in one of the year's biggest real estate stories, reflects: "The story of the year is sentiment in real estate markets towards retail is a lot more positive than it has been for a long time. In the capital markets there is more liquidity for retail parks and shopping centres and more investor demand coming through and bank lending and credit is more positive around retail. The occupational market is in a good place too.
"The other understanding is it is not about pure play online. People are realising stores are very important as part of fulfilment. The data shows online spend by customers in our assets where that spend is connected to a store visit is 2.5 times higher than when not connected to a store visit. That demonstrates how important stores are in the model. Investors are appreciating that a lot more."
Industrial keeps strong
The industrial and logistics sector is seeing steady demand, with take-up of large units approaching pre-COVID averages, according to Colliers' head of industrial and logistics research Andrea Ferranti.
"While demand has remained resilient, a combination of factors such as sluggish economic growth, a challenging geopolitical environment and strong cost pressures has made some occupiers reticent to take-up expansionary warehouse space, hence curtailing take-up activity," Ferranti says, but adds that there continues to be some sizeable requirements in the market which will sustain demand.
"We expect activity to improve slightly next year and the following year with take-up of warehouse space greater than 100,000 square feet to exceed the 10-year pre-COVID average of 27.5 million square feet, in 2026."
Supply has increased slightly when compared with the end of 2023, but it has now stabilised and Colliers is forecasting a contraction next year.
"Speculative development deliveries of 100,000-plus-square-foot warehouses have significantly declined – from 20 million square feet in 2023 to a forecasted 9 million square feet this year," says Ferranti, adding that Colliers’ data shows that a similar amount will be developed speculatively in 2025.
"This reduced pipeline, coupled with resilient occupier demand, is expected to keep availability in check, further supporting rental growth. Speculative development for smaller and multilet units has been muted due to the greater barrier to entry to acquire land in urban areas and elevated construction costs, resulting in most of the capital targeting larger and less asset management intensive developments," says Ferranti.
This is the reason that rental growth across the UK has been "remarkable", according to Ferranti, with the market achieving a year-on-year increase of 6% in the third quarter of 2024.
"The North West outperformed, recording growth of 7.8%. Moving forward, Colliers anticipates average UK rental growth of 5.5% for 2024, moderating to between 3.5% and 5.5% in 2025."
Len Rosso, head of industrial and logistics at Colliers, adds that looking ahead, with a combination of forecast lowering borrowing costs, normalising speculative development and improving economic conditions, Colliers is confident rental growth will continue.
“Meanwhile occupiers, especially those with more tailored requirements, will start reconsidering their options for build-to-suit units. With financial conditions improving, appraisals will stack up more favourably, and occupiers will be able to realise their long-term property needs.”
Paul Makin, investment director at Warehouse REIT, says one of the stand-out themes of the year has been the resilience of the multilet occupational market. "Rental growth has continued to outperform other parts of the real estate sector, and has been strongest across our small and mid-boxes. This chimes with what we’re hearing elsewhere in the market, and is being driven by both evolving tenant requirements, as well as a continued lack of new supply coming on stream, which is supporting single-digit vacancy across most regional submarkets."
Makin says asset management initiatives continue to be key to portfolio performance. "Improvements to the appearance of estates and introducing on-site amenities and facilities such as an on-site office, a café and outdoor furniture increase the ability of landlords to attract higher value occupiers and drive higher rents. At our Bradwell Abbey estate for example, we have welcomed a precision engineering business."
In the investment market, Makin is seeing renewed interest in multilet assets from private equity and other institutional capital, as well as listed businesses. "These investors are being attracted by the reversionary potential of MLI assets, particularly where leases are not capped and collared, meaning you can actually quickly capture this reversion – it’s not uncommon for rent reviews or regears to be 30%, 40% or even 50% above the previous passing rent. We’ve seen assets change hands between 3% and 5% and that has supported some yield contraction on multilet assets for the first time since 2022."
James Porter, building consultancy partner at Rapleys, says that in industrial there is a shift towards more sustainable warehousing particularly at the higher end of the market, while the industrial estate continues to evolve as occupiers demand more amenitised spaces that enhance wellbeing – including green spaces, on-site gyms and other staff facilities not usually associated with sheds. "Whilst the outlook is positive, challenges remain – mostly availability of land particularly in London and other urban areas."
Louis-Simon Ferland, chief executive, Boreal IM, says if you have been in the market long enough, you know that there is no such thing as certainty when investing, but he is looking towards a new cycle with increasing levels of confidence.
"There is better visibility on the mid-term macro picture, and with limited amounts of industrial supply in our target markets we are very positive about the investment opportunity ahead of us. He says he prefers targeted opportunities where multiple levers for value creation through asset management exist.
"Buying bulk – portfolio premiums are back – and hoping for rates to come down seems like a dangerous one-way bet given the persisting macro volatility."
Residential and living sector
Beds and sheds have remained particularly in demand given their seeming defensive qualities for investment.
LSH reported investment across the living sectors playing a major role in driving improving investment in the second quarter. It said total living volume hit £5 billion in the quarter, the highest since the second quarter of 2022 and 40% above trend, lifted by substantial portfolio deals to overseas buyers.
Student accommodation volume soared to £1.4 billion and included the second quarter’s largest overall deal, Mapletree’s £964 million purchase of 30 purpose-built student accommodation assets with the UK component comprising 19 locations, from Cuscaden Peak Investments.
The mood music from the new government has placed housebuilding at the centre of its drive to improve UK economic performance and that suggests a huge opportunity for the residential sector.
Thomas Vandecasteele, managing director, Legendre UK, says Labour’s ambitious agenda to "get Britain building" is keenly supported by the property industry. He adds though that companies need to assess the viability of bringing schemes to site, especially given increasing construction costs.
“Emerging markets such as coliving continue to provide strong investment opportunities across the UK, with the potential to meet the housing needs of communities nationwide. However, investors and developers will need to remain mindful of the evolving regulatory frameworks across the regions, and potential challenges of market saturation.
“Recent government announcements promise support for small housebuilders and the build-to-rent sector, and we are hopeful that the revised NPPF and changes to local plans can build momentum for housing delivery and economic growth targets, thereby instilling confidence in investors."
Finance and geopolitics
Delancey's Ritblat says that in 2024, private credit, alternative lenders and new entrants continued becoming a more significant part of the UK capital markets, as has been evident for a few years. He says Delancey's own private credit strategy saw much greater competition for transactions from multiple players.
"The continued bank retrenchment, coupled with falling real estate values, have created opportunities over the last few years to provide mezzanine and stretch senior loans, the returns of which, on a risk-adjusted basis, have continued to encourage numerous investors and also some traditional equity investors to choose these offerings over pure equity. That is likely to continue for now."
Patron's Breslauer says overhanging everything has been questions around whether global political events have meant economies would be "stable, worse or better".
"There were huge questions around Trump, the Middle East, interest rates, oil and inflation and governments dealing with federal deficits and what changes of governments mean for ESG.
"What was important with Trump is he swept in and as a result he has a true open mandate and as a result of that every government has had to rethink its strategy. More has happened since the US vote than had happened in the previous two years. Hopefully we are in a more stable place in terms of the world. When you get to inflation I think the dynamic is driven by whether trade policy becomes a serious issue. Do global leaders have the financial strength and vision to negotiate free trade agreements? The other thing is with the stock market recovering the opportunity for people to invest in real estate has increased and should lead to more investment next year."
Breslauer senses ESG was a bigger issue a year ago. "The government has pulled back a lot. On the commercial side there is a similar challenge but it has been built into the system and we are taking a lead on this."
Kelly Cleveland, head of real estate and investment at British Land, says there is every reason to be more optimistic about the company's favoured areas of central London offices, retail parks and campuses.
"Retail parks and prime offices are bouncing back strongly, with shoppers flooding to locations they can easily reach and explore the full range of omnichannel options, and across the generations an enthusiasm for collaboration with colleagues that only the workplace can deliver. We are experiencing the best occupational performance in retail parks in over a decade with retailers actively competing for space as they look to expand out of town. We expect this trend to continue in 2025 as measures announced in the Autumn Budget put pressure on retailers' costs and they look to expand into the most efficient and profitable physical spaces."
Ezra Nahome, chief executive of Lambert Smith Hampton, adds: "Goodbye 2024, hello 2025. Having negotiated the toughest 5 years I can remember I’m more optimistic than ever because of our people.
"In 2025 greater resilience, adaptability and imagination will help turn good businesses into great ones. Our people have these characteristics in abundance. And whilst technology has fundamentally changed how we work it’s still just a tool, real progress in property starts with people. It always has and always will. Remember, what doesn’t kill us makes us stronger …and that’s coming from a Spurs fan! "
That sounds like good news for UK real estate after a difficult but intriguing 2024.
The CoStar News team would like to thank all of our readers for their interest and input this year and wish you all a restful and merry Christmas.
