Demand to invest in the retail property sector is up by 35% compared with the same three-month period last year, based on enquiries to commercial agents about listings on Rightmove.
High-street retail investment demand, which makes up a large proportion of the retail sector, is up by 56% compared to the same quarter last year, the highest this figure has been since 2021.
Rightmove said interest rate cuts are a key driver of the bounce back in both retail investment, and investment in commercial property more broadly, boosted by the Bank of England’s second rate cut of the year in May, bringing the current rate to 4.25%.
Andy Miles, Rightmove’s managing director of commercial real estate, said: “The growth of the industrial sector has been one of the main stories so far this year, but we can see a resurgence to invest in retail and office space too.
“Rate cuts are helping investment into commercial property, and after a period of decline it appears that retail and office spaces are becoming more attractive to invest in.”
Decreasing supply levels in the retail sector may also be helping to boost demand for available listings.
The number of retail properties available to invest in is down by 4% compared to last year and has been on a downward trend since the start of 2024.
Demand from businesses to lease retail space is also up by 10% compared to last year, signalling an improvement in businesses wanting physical retail spaces despite the growth of online commerce.
Michael Sears, NAEA Propertymark commercial advisory panel board member, said: “These figures are the highest they have been since 2021 and show that there is still a healthy desire for high-quality retail space across the UK and that many employers are also finding a new balance for their office space requirements that complements hybrid working arrangements with their colleagues.
“These factors added together are a positive sign of a high street resurgence in many regions.”
Outside of the retail sector, the office sector has seen a similar bounce back in investment demand. Demand to invest in office space is now 65% higher than the same three-month period a year ago. Comparatively, at this time last year, this year-on-year trend was down by 13%.
As the conversation around in-person, remote and hybrid working continues, demand from businesses to lease office space is now 12% ahead of this time last year.
In London, demand to lease office space is 14% higher than this time last year, with some key office hotspots like Westminster (+29%) and the City of London (+21%) even higher.
The industrial sector leads the way this quarter in both the leasing and investment sectors. Demand to invest in the industrial sector has more than doubled (+105%) compared with the same period a year ago, while demand to lease industrial space is up by 41%.