In the past 50 years commercial property has generally boomed, the 1980’s saw wage growth accelerating all markets although commercial property and residential sectors suffered during the 1990’s market crash with various micro cycles effecting sectors across the board – the dot com bubble, 9/11, sub prime crash, Brexit adjustments. The residential market has proven resilient, where as the office sector notably has fallen away, the retail sector affected by the Pandemic lockdowns has since evolved assisted by relaxed Town Planning Policy and the logistics market has accelerated driven by technology / just in time deliveries.

In the past 20 years average house prices have increased by 74% , a 3.7% year on year average, against an average Inflation Rate over the same period of 2.24%. Inflation peaked at 9.07% in 2022 due to rising energy costs and food prices. Although this appears to have stabilised recent ONS figures show inflation hovering around 2.6% to 3.5% The sustained growth in residential values is earmarked by many factors, amongst which feature –

• Demand for more housing
• Foreign investment
• Sustained periods of low interest rates
• Demographic changes / population growth
• Working from home

The following shows the Average Percentage increase in house prices over 20 years:

Source: Zoopla House Price Index, May 2025

Residential supply has fed partly from the noticeable amount of conversion of office space into apartments. As the justification for conversion relies on the developer being able to carry the conversion cost and make a profit, the subdued levels of office rents / capital values are concerning for the future of business space sustainability. Businesses are becoming aware of the need for “working from the office” efficiencies, whilst workers’ preferences show “working from home” saves on travel expenses, eases day to day life / caring duties, provides greater lifestyle flexibility. This new era is driven primarily by the rapid adoption of Teams / Zoom / video calls and technology, transitioning the former traditional 9:00 to 5:00. Businesses are trying to rebalance / find their way through supporting employee welfare market driven preferences, whilst maintaining and endeavouring to increase productivity.

Consequently flight to quality workspace environments has become the norm, with Grade A / Grade A plus offices in good demand, lesser specified not so – going to an office has to be worth the commute. The cycle here of loss of poorer quality office stock into the residential sector, where landlords don’t feel brave enough to upgrade, means business space availability will become constrained. Building space takes some time, often years through the Town Planning and build process. There is a logical swing point where commercial office property values will once more increase above and beyond their Pre Brexit / Pre Pandemic values. In the meantime for this sector in particular, there are alluring “deals” to be gained whether as a tenant occupier or owner occupier.

As market experts Christopher Thomas help clients navigate their way through the commercial property landscape, in corporate lease advisory and occupier capacity – recently, Norgine, Terumo, Menzies, The Alms House Association, to mention a few. We also act for many landlords, providing insightful market advice, valuations, lease event negotiations and property marketing.

Christopher is an RICS Accredited Expert Witness Surveyor, Associate RICS Member and Registered Valuer.