"The sector can be somewhat complicated, particularly for those advisers who do not handle commercial cases on a daily basis."
There’s no question that the commercial market faces new challenges off the back of the pandemic. The reality is that the office has not been quite so central to the running of many businesses over the years as we have all had to get used to working from home. And it appears likely that at least some amount of remote working will be the norm for many in the years ahead.
Indeed, we’ve seen a host of big-name employers, from building societies to accountants, announcing their staff will be given far more flexibility over precisely where and when they work each week.
Yet predictions that the days of office working are over may be somewhat premature. A poll by Savills found that a massive 86% of UK office-based workers believe the office is still essential for a business to operate successfully in the post-Covid world. No amount of Zoom and Team meetings can quite replicate the office setup, and even if it’s not for a full five days a week, business operations will continue to revolve around a central office.
Growing returns
This is borne out by the yields being enjoyed by commercial investors currently. The Savills study broke down how yields have moved lately for a host of different commercial sectors, including the likes of provincial and city offices, high-street retail, shopping centres, hotels and pubs.
And it’s notable that in only three of those categories did yields fall in August: provincial offices, food stores and distribution.
This is echoed by research from Cushman and Wakefield which found that office space take-up jumped 42% in the first quarter on the preceding quarter, noting that there is strengthening demand.
The evidence is there that the economy is getting back onto its feet following the trauma of the pandemic. We can see it in the unemployment data too, with unemployment now down to 4.6%, only marginally higher than before the pandemic.
It’s a similar story when you look at job listings. The ONS reported that between June and August, job vacancies rose past one million for the first time since records began, a clear sign of the improving fortunes of businesses of all kinds up and down the country.
This is feeding through into ever-improving returns for commercial landlords, boosting their confidence as they look to expand.
Increasing competition
It’s not just landlords who are demonstrating greater confidence in the commercial market though. We are also seeing increased confidence from lenders too.
This competition is resulting in lenders being more creative in the terms and rates they provide on their commercial deals, doing what they can to stand out from the crowd and attract a greater slice of the pie.
That’s a fantastic development for commercial investors, who can get on with their expansion plans off the back of more competitively-priced funding.
The role of advisers
Those expansion plans inevitably involve searching for commercial finance to help fund them, and that’s where advisers come in. All forms of property investors, whether you’re talking about a buy-to-let or commercial landlord, recognise the crucial role that intermediaries play in helping them access that funding, something they simply cannot do alone.
However, the sector can be somewhat complicated, particularly for those advisers who do not handle commercial cases on a daily basis. That’s why it’s so important to think carefully about who to work with and who can assist them when placing these cases.
The right partner will have the relevant experience and expertise around all elements of the commercial market to spot the common pitfalls associated with your client’s case, and be able to navigate around them. The commercial sector can be incredibly complicated, and there is simply no substitute for the knowledge and understanding that comes from experience.
In addition, a well-placed partner will boast extensive relationships with lenders across the sector will improve the chances of your client benefiting from an excellent deal.
At Crystal Specialist Finance, we’ve developed our Hub platform to help brokers swiftly populate client requirements. Within just a couple of minutes they can be connected with an underwriter and get the terms for a deal shared and agreed.
Picking who you collaborate with can ensure your clients can swiftly find the finance they need no matter what their commercial plans may be.
