The past 12 months have been reasonably positive for the commercial property sector, with demand rising at last, and returns for investors starting to improve.
Prices in October were reported to be on the rise for a sixth straight month, according to a report from Investment Property Databank Ltd, a trend that the market will want to continue.
Looking ahead to 2014, though, the sector is going to have to continue to build on the positivity, with more needing to be done
The economy
Expansion in commercial property markets - be they office spaces, warehouses or retail units - depends on how the economy is doing. At the very root of all business plans is the way in which the country as a whole is performing. It's simple - if the economy is improving, businesses will be looking to grow and expand.
The return to health in 2013 has been spearheaded by the fact that the economy has been expanding ever since the summer, driven forth by the likes of retail, services and construction. Latest prediction revisions show that the overall growth for 2013 should be 1.4 per cent (up from 1.3 per cent).
Into 2014, there is set to be an even better level of growth across the nation. The latest figures from the British Chamber of Commerce (BCC) has predicted that the economy will expand by a total of 2.7 per cent next year.
This is an increase from the 2.2 per cent growth forecast in August, and the 2.4 per cent predicted last month.
Crucially, the new forecast leaves the UK looking at its fastest rate of expansion for seven years.
With this sort of confidence starting to filter back into the economy, it could be the case that businesses will start to look for more commercial properties (investment is expected to rise 5.7 per cent), subsequently increasing the demand and rental rates throughout the year.
Grade A stock
One of the predictions for 2014 is that commercial property will start to move towards Grade A stock on a more widespread basis.
In 2013, Grade A stock made up less than two per cent of all the commercial property in the UK. However, with more and more companies having upgraded to internet-dependent services like voice over IP (VoIP) phone services and cloud storage, the need for new properties with the capability to live up to their demands should rise, potentially leading to an influx of new offices of this type.
Commercial investment
Property investment is expected to rise as a whole throughout the UK, with the residential rental market expected to absorb the largest portion of new money.
However, there is expected to be a commercial property increase as well, with an increase of 11 per cent in semi-commercial investment and nine per cent in commercial stock likely to take place, according to figures published by Mortgages for Business.
The company says that lenders ramping up lending across the board for property investors - it could be as much as 25 per cent higher than in 2013 - will help to ensure there is a much higher level of investment throughout the year.
Investors are likely to be encouraged to part with their cash thanks to the promise of good returns throughout 2014. Ignis Asset Management said it has revised its prediction for 2014 as it now expects to see return levels hit 11.5 per cent throughout the year.
This will be the highest returns enjoyed by investors since the market saw levels reach as high as 18.9 per cent in 2006, before the financial crisis caused problems for the sector.
A breakdown of the figures shows that office space will be the most sought-after as the business sector enjoys a return to health. Those who are investing in this sort of stock will be able to bring in returns of 13.8 per cent, Ignis said.