News

As we are halfway through 2025, we thought it would be a good time to provide a commercial property market update. The first 6 months of 2025 have been very interesting, in the commercial property sector for several reasons. Firstly, whilst there has been a good constant demand to rent excellent quality office accommodation and well positioned warehouse space, we are still lacking stock in key hotspots around the county with no speculative brand-new accommodation coming onto the market. This continues to push up rents for Industrial / warehouse premises and to a lesser extent offices (which is putting intense pressure on existing tenants who are forced to pay a lot more at review or lease renewal, sometimes doubling over a 5-year period!)

Secondly, demand for freehold premises has remained strong but purchasers have been cautious in the knowledge that interest rates are predicted to fall towards the end of the year and with higher costs to business, uncertainty surrounding the UK economy, not to mention the situation in the Middle East and Ukraine and this is sowing doubt as to whether now is actually the right time to buy!

There has been a lot of debate about the office sector since Covid and particularly over the last 18 months with most businesses saying that they definitely need office space and that the space must be of a high quality to attract talent, and to attract the home workers into the office three days a week. With no sign of demand for offices reducing, it is interesting to note how little purpose-built office accommodation has been built in our county over the last 15 years, particularly in towns and cities where we have seen a spike in demand in recent years.

Developers are not building offices through lack of demand, but due to the astronomic cost of building a purpose-built office and the fact that whilst we have seen rental growth since Covid it is not keeping up with the rate that developers need in order to build in our county.

If we do not address this problem and rely primarily on re-proposed offices that cannot ever provide the high level of office accommodation expected by modern workers, then we will start to lose key service sector jobs to Birmingham leaving us with predominantly warehouse / industrial premises which could have a detrimental effect on the local economy.

For further information on commercial property in Worcestershire, please contact GJS Dillon on 01905 676169 or click here to view our 2025 Market Research Report.