How the commercial building market operates

The pandemic has transformed the commercial property market. And while the office isn’t dead yet, it is changed for ever. Owners and property managers are pressing the engineering service companies and operating engineers to find ways to operate buildings more cost effectively and how this can drive down the costs of running an office. This is very key nowadays. This is also key if people are going to continue to rent an office space too.

Making the investment in the first place

Buying a house not only puts a roof over your head and provides financial security over the long term, but it can also be a good way to invest your money. However, it is not completely safe. For example, the financial crisis in 2007 saw many property investors get their fingers burnt, illustrating that investing in property is not without risk. Commercial building and property is an important asset class to consider as a way of spreading. Or diversifying, risk in your investment portfolio. Generally, property isn’t highly correlated to other assets classes such as cash, fixed income (bonds and gilts) and equities. This means that property values move independently of other assets and aren’t typically affected by what’s going on in the stock markets. Commercial builders after all work in their own way.

Investing in commercial property funds

Many property investors prefer the familiarity of investing directly in residential property. But commercial property can offer a simpler and lower-cost alternative. Commercial properties cost millions of pounds to purchase or build. They can command huge rental incomes. But, in most cases, they’re impossible for smaller investors to buy outright.

Therefore, most invest in commercial property through investment funds, like unit trusts, Oeics or investment trusts. You can find out more about these products in our different types of investment guide. These funds either directly own properties and pay you returns based on their growth in value and rental income, or buy shares in property-related companies, paying you returns based on the growth in the value of the shares and the payment of dividends.

Different types of commercial property

Your personal experience and knowledge will impact the type of commercial property you choose. Perhaps you have refurbished a shop or an office before? Maybe you have experience in an area of business and so you understand the type of premises these businesses would like to rent? Perhaps you’ve noticed a gap in the market for a particular sort of property? You might have spotted an opportunity such as a new office block development in an up-and-coming town with excellent transport links, or an industrial unit outside of town that’s affordable and handled by a management company. It is worth watching out for regeneration projects involving new office or warehouse developments in cities. Or in towns that are attracting large companies or are seen as a hot-spot for start-up businesses.


You might invest in a commercial property in a specific area. Maybe because it is near to where you live or work. Or it is the hub of a type business that is familiar to you and so you can estimate the likely success of your investment. If you are looking for a modest short-term investment you might choose an area with a lower cost of living where you can find commercial property at a reasonable price. It is key that what ever you do you do as much research as you can. After all, commercial building is an investment market.