In a recent analysis conducted by Sirius Property Finance, it has been revealed that the commercial property market in the United Kingdom witnessed 2,682 transactions in 2022. The study examined the level of commercial property transactions across different regions in Britain and forecasted the market’s performance for 2023.

According to the data, London emerged as the leader in terms of market activity, with 507 transactions, followed by the South East (419) and the North West (309). These three regions are expected to maintain their status as commercial property hotspots in 2023. However, the sector as a whole is projected to experience a significant reduction in market activity.

Among the regions, Yorkshire and the Humber are expected to witness the largest decline in market activity, with transactions predicted to fall by 65%. London (down 56%), Scotland (down 55%), the South West (down 52%), and the East of England (down 51%) are also anticipated to see total transaction levels drop by more than half.

Despite the overall decline, the South East is predicted to lead the market in terms of the share of total market activity, accounting for 18% of all commercial sales. London is expected to benefit from 16% of all commercial transactions, securing the second position, while the North West ranks third with 12%.

Kimberley Gates, the Head of Corporate Partnerships at Sirius Property Finance, commented on the forecasted reduction in commercial market activity for 2023. Gates emphasized that although this suggests a potential crisis in the sector, it is merely a reflection of the current landscape and the uncertainty brought about by a series of interest rate hikes.

Gates further noted that commercial buyers, similar to those in the residential sector, are approaching transactions with increased caution. This caution stems not only from the current financing costs but also from the anticipation of potential increases in the short to mid-term.

“While we expect this cautious sentiment to dampen enthusiasm for commercial real estate this year, we do not foresee any long-term decline materializing as the economic outlook improves,” stated Gates.

As the commercial property market in the UK faces a reduction in activity, industry experts remain hopeful that the sector will gradually recover and adapt to the evolving economic conditions.