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New research from smart buildings specialist, LMG, reveals commercial real estate (CRE) landlords are under pressure in a rapidly evolving market.
UK landlords are under mounting pressure from rising interest rates, operational costs, and tenant demands — impacting commercial real estate (CRE) businesses across the nation. Over two-thirds of UK CRE leaders have expressed concerns about the economic climate’s impact on their operations.
The research, which surveyed 50 CRE owners in the UK, reveals how commercial landlords and tenants are navigating the shifting CRE landscape.
Three-quarters (74 per cent) of the survey respondents cite high interest rates as a top challenge. More than half (56 per cent) cite increasing operational costs, while 42 per cent highlight increasing environmental demands from tenants as a pressure point.
In response to these pressures, all respondents are considering changes to their business model to adapt to market conditions.
Grappling with high borrowing costs, regulatory uncertainty, and evolving tenant demands, the UK CRE sector appears to be at a pivotal moment.
The findings present an urgent call for landlords to consider strategies that prioritise resilience, such as re-evaluating the value of office spaces amidst changing work patterns, staying ahead of regulatory changes, and responding to tenants’ evolving expectations.
Mike Hook, Executive Director, LMG said: “The UK commercial real estate sector is at a crossroads. With uncertainty surrounding interest rates, mounting operational costs, and tenants demanding smarter, greener spaces, landlords face a stark reality: adapt now or risk obsolescence.
“Our research shows that 74 per cent of landlords cite high interest rates as their biggest challenge, and nearly half are grappling with evolving environmental expectations. Those who proactively invest in technology, sustainability, and tenant-focused experiences will be the ones who emerge stronger. The time for action is now — landlords who hesitate may find themselves left behind in an increasingly competitive market.”
To download LMG’s full report ‘Smart Moves: How Landlords and Tenants Thrive in the Evolving CRE Market’, click here.
On 27 February FMJ will be hosting a webinar in partnership with workplace management solutions provider, Matrix Booking, to discuss the challenges posed by managing hybrid work models, meeting sustainability targets, and dealing with economic pressures, which have long required a fine balancing act for Facilities Managers. This is set to become more complicated this year with the Government announcing plans to allow staff to work more flexibly.
The webinar will bring together the digital experts from Matrix Booking alongside a panel of workplace thought leaders to discuss how FMs can create the perfect balance.
Can’t make it no problem… Simply sign up below and after the webinar has been broadcast, we will send you a link to watch the recording. Register for the webinar by clicking here.
