28th January 2025
Real Estate Outlook 2025: South West Commercial Property Hits Record Highs
Agency & Commercial Development • Planning Consultancy • Residential Development
discover the 2025 real estate outlook with market monitor
The South West property market has kicked off the year with record-breaking rents and continuing occupier priorities, showcasing the region’s resilience and ongoing challenges. Let’s explore the key trends shaping the South West real estate outlook for 2025.
record Headline rents for office space
Many key centres across the South West have witnessed record headline rents for office spaces, both in town and out-of-town. Demand remains concentrated on Grade A spaces, which offer the best ESG credentials as occupier’s desire for lower running costs continues.
In Bristol city centre, rising new-build costs are constraining new developments. This trend is echoed across the wider market, where high-quality existing stock is becoming the focus for occupiers and investors. These stakeholders are increasingly identifying opportunities to purchase properties at significantly lower values compared to equivalent new-build construction costs.
In turn, it is expected that there will be very little new-build office developments, which is already evident in Bristol. Simon Price, partner at Alder King, explains this in more depth to Insider Media – read the article here.
industrial sector faces supply challenges
The industrial sector has also experienced record rents, spanning both prime and secondary stock. Across the region, there is a recognised shortage of supply, which is curtailing take-up.
Adrian Rowley, head of agency at Alder King, said: “Nowhere is this more evident than in our key market place of Bristol, where just over 60% of the total supply is account for in three buildings at Panattoni Park and Mountpark 360.”
Further down the M5 corridor, there are built-to-suit schemes available, but as Adrian continues: “The prospect of new speculative development currently looks slim, as high construction costs along with softened investment yields has impacted the delivery, making it challenging in all but a handful of locations”.
However, renewed demand for mid-box logistics space has led to a series of key transactions, further bolstering the sector.
retail rebounds with cautious optimism
The retail sector has seen a noticeable bounce-back in major cities such as Bristol and Bath. National retailers are re-establishing a presence on the high street, albeit with a cautious approach in light of the ongoing cost-of-living crisis and increasing occupiers’ costs.
Notably, Marks & Spencer’s decision to return to Bristol and relocate their existing Bath store to SouthGate signals a major boost to the region’s retail scene. Across the South West, there is also a growing trend towards repurposing properties for alternative uses. Former Debenhams stores, for instance, are being transformed for residential, educational, and leisure purposes.
While investment activity in 2024 remained relatively subdued, “The outlook for 2025 is more optimistic”, according to Oliver Stretton, head of investment at Alder King:
“Commercial property values are now showing signs of recovery, driven largely by positive rental growth which is evident across most occupier markets. A cyclical buying opportunity now exists, where the strongest returns are typically achieved on investments transacted in the early stages of recovery. We expect this to stimulate increased transactional volumes in 2025.”
