Commercial yields hit six per cent ‒ Revolution

The advisory firm noted that while some areas of the commercial property sector suffered significantly as a result of the pandemic, and the shift to remote working, commercial rental yields are holding strong and actually delivering a better return than residential property.

Looking at a regional break down, the South East has the strongest rental yields at 8.6 per cent, ahead of the North East which comes in at 8.1 per cent, and the East at 7.4 per cent. 

In terms of commercial stock availability, the South West accounts for 16 per cent of all commercial stock currently listed for sale. This is followed by the North West at 14.9 per cent, East with 12.8 per cent and South East at 12.5 per cent.

Revolution Brokers suggested that investing in commercial property is becoming more accessible to no-professional investors, and noted this can present them with different challenges from investing into the residential market. 

These can include the lengthier process for finding a new tenant, how challenging it can be to remove tenants who run out of money, as well as the more complex legal elements of commercial investment.

Almas Uddin, founding director of Revolution Brokers, said that while commercial properties like office units and retail outlets have been significantly impacted by the pandemic, on the whole yields remain very favourable, with securing a tenant the primary concern for commercial landlords, rather than the return on offer once they do.

He continued: “Despite this and the turbulence of the last few years, it’s an exciting time to get into commercial property investment and there’s now a real emphasis on how commercial spaces can better suit the needs of today’s tenants and their customers.”

Mortgage brokers recently told Specialist Lending Solutions that they were seeing an increase in commercial mortgage enquiries, though were split on how sustainable the higher enquiry levels were.