Private investors: the catalyst in the commercial real estate recovery
PRIVATE CAPITAL HAS BEEN a key contributor to the UK’s commercial real estate market recovery in 2024, with private investors benefiting from lower prices, reduced competition and lower barriers to entry. And while private investors will continue to find opportunities, competition from institutional players is set to increase in line with the wider rebound. In the highly nuanced commercial
real estate space, matching private capital with the right assets is key, and this requires local, regional and global expertise.
REPRICING PAVES THE WAY In 2023, UK commercial real estate investment volumes fell 36 per cent on the 2022 level. But in 2024, there was a marked recovery, with investment increasing by 16 per cent year-on-year, above global growth of 10 per cent. Activity in the UK was particularly strong in Q4 2024, when investment increased 33 per cent from the previous quarter. ‘If you look at private investment
capital and private wealth, in 2024 they represented nearly three- quarters of the market,’ says Andrew Frost, head of capital markets, UK, at JLL. ‘These two groups tend to become active earlier in a recovery – the private investor will have a conviction position on investment and on real estate, and they will move. So they’re quite an important catalyst in terms of a market recovery.’ In recent years, the higher-for-
longer interest rate environment and wider economic uncertainty resulted in a downturn in real estate activity and rapid repricing – a dynamic that started in 2022 and accelerated
through 2023. This price correction has meant private investors have been able to fill the void leſt by more cautious institutional investors and acquire desirable assets at lower prices, with less competition.
THE ADVANTAGE OF AGILITY Francesca Spiller, a director in JLL’s Central London capital markets team who specialises in the West End, says private investors were waiting for such a moment. ‘Quite a lot of established private
investors were keeping an eye on the market,’ she says. ‘Prior to the rebalancing, they couldn’t make the numbers work, but in 2024 we saw them actively buying.’ Spiller shares the example of Global Holdings Management Group, which purchased 10 Great Pulteney Street from online fashion group Boohoo in December 2024. When the initial buyer for the property fell through, Global Holdings stepped in. ‘It was getting towards year-end, Boohoo needed to sell, and Global Holdings were able to offer to exchange within a week,’ Spiller says. This allowed the group to secure
the property at a cost of £1,000 per square foot. ‘To put this into context, once the building is refurbished and Global Holdings achieve prime Soho rents on it, they could potentially exit at over £2,000 per square foot.’ This agility differentiates private
investors. ‘In an institutional environment, there are layers upon layers of governance,’ says Frost. ‘The HNW private investor is able to see the opportunity and make the decision to buy – and quickly. That’s very appealing to sellers.’
UNLOCKING OPPORTUNITIES This year, geopolitical and economic uncertainty may be weighing on the market and slowing down decision- making in some cases, but the commercial real estate sector has entered this period in a relatively healthy state, says Frost. He expects the pool of active capital to become broader and deeper, and a rebound in institutional activity will offer more liquidity and create sell-side opportunities for private investors. To make the most of these
opportunities, accessing the right expertise is key. ‘Institutional clients oſten have their own in-house teams of experts,’ Spiller notes. ‘But smaller family offices or overseas clients oſten need someone that can provide proper advice. At JLL you have a full suite of people around you – specialists in development, leasing, rent review, planning and sustainability, etc – who can offer that.’ Frost adds: ‘HNW individuals
really value a relationship. They’re not just looking for transactions; they’re looking for an understanding of their priorities and their requirements, and high-quality advice founded on a long-term relationship. We endeavour to understand clients’ challenges; how we can help and where we can bring the best of JLL to those clients. ’
EYE ON SUSTAINABILITY Another encouraging dynamic is that the binary view on sectors of the commercial real estate market is fading, with investors taking a more nuanced perspective and identifying opportunities on merit.
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