Commercial property landlords are currently averaging yields of six per cent across England, climbing as high as 8.6 per cent in some regions, according to new research by advisory firm, Revolution Brokers.
Some areas of the commercial property sector took a big hit as a result of the pandemic as offices were left empty and many workers are yet to return full-time to their desks. Retail in particular has long struggled to find its place in an increasingly online world says Revolution Brokers, while industrial sectors are facing numerous challenges stemming from the pandemic, Brexit, and the rising cost of materials and energy.
Despite this, it added commercial rental yields are holding strong and remain higher than residential yields. Across England, the average price for commercial property is £968,177 while the average monthly rent is £4,806. Resulting in an average yield of six per cent.
In the South East yields are averaging as high as 8.6 per cent, followed by the North East (8.1 per cent), East (7.4 per cent), West Midlands (5.7 per cent), and East Midlands (4.8 per cent).
In terms of commercial stock availability, the South West is home to the biggest abundance and the region currently accounts for 16 per cent of all commercial stock listed for sale. This is followed by the North West (14.9 per cent), East (12.8 per cent), South East (12.5 per cent), and East Midlands (11.9 per cent).
Commenting on the research, Founding Director of Revolution Brokers, Almas Uddin, said: “The pandemic has hit many areas of the commercial sector for six and it’s fair to say that both office units and retail outlets were some of the most seriously impacted. Despite this, commercial rental yields remain very favourable and at present, the primary issue facing commercial landlords is securing a tenant, not the return on offer once they do.
He added: “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.”