Demand for commercial property investment soared by 28% year-on-year in Q4 2024, marking the largest annual increase since Q2 2021. That’s a lovely statistic, but as an investor where are the opportunities and where are the challenges?
In a recent comprehensive report from Alan Boswell Group, where they analysed 31 major UK cities, assessing a variety of metrics including business closure rates, non-residential burglary and shoplifting rates, retail sales performance, long-term flood risk, empty premises relief and rateable value per square metre to reveal the most and least challenging cities to thrive in commercial property.
Leicester, Bristol and Derby have emerged as top three UK cities for commercial property investment in 2025, with Cardiff, Birmingham and Bradford being the most challenging.
Leicester claims the top spot as the best UK city to own a commercial property in 2025, boasting an impressive final score of 7.06/10. With retail sales at 100.3% of 2019 levels, the city has fully bounced back post-pandemic.
Commercial properties remain an attractive investment, with a modest 3.79% increase in rateable value over five years, as well as relatively low crime rates, with only 6 shoplifting cases and around 1 non-residential burglary per 1,000 businesses.
Bristol ranks as a top city for commercial property investment, scoring 7/10 overall. Thanks to a relatively low business closure rate of 118 per 1,000 businesses, the South West city offers a supportive landscape for enterprises to thrive. Investors also benefit from one of the lowest long-term flood risks in the UK, making Bristol a safer bet for commercial property.
While the city faces a slightly higher crime rate – with 9 shoplifting incidents per 1,000 businesses – a 2.86% increase in rateable value indicates steady property demand over five years.
In third place is Derby, earning a final score of 6.99/10. Compared to 2019 levels, Derby’s commercial property landscape benefitted from 102% in city centre retail sales, indicating healthy consumer spending in the city. Safety is another advantage, with non-residential burglaries remaining low at just 1 per 1,000 businesses.
With slightly lower empty premises relief to be provided in 2024-5 at £193,291 per 1,000 businesses – compared to its East Midlands counterpart Leicester, with £261,469 per 1,000 businesses – this could hint at fewer vacancies and a more stable occupancy rate in Derby.
Also included in the top 10 are; Brighton & Hove; Preston; Southend on Sea; Plymouth; Swansea ; Luton and Southampton.
At the other end of the scale, Cardiff ranks last as the UK’s most challenging city for commercial property success, scoring just 2.72/10. With a staggering 152 closures per 1,000 businesses and the nation’s highest long-term flood risk, commercial investment prospects may appear bleak compared to other cities.
Additionally, a 1.86% decline in rateable value over five years signals waning commercial desirability in the Welsh capital, coupled with a relatively high shoplifting rate of around 10 cases per 1,000 businesses.
Birmingham follows closely behind, with an overall score of 2.78/10. The city’s high business closure rate of 158 per 1,000 businesses – among the highest in the UK – combined with a relatively weak retail sales performance at 89.5% of 2019 levels may make it harder to thrive in the retail sector.
A stagnant 0% rateable value growth over five years further suggests that commercial properties in Birmingham are not appreciating in value, which could signal weaker market growth and may deter commercial investors.
Bradford rounds out the bottom three with a score of 3.34/10, reflecting its high crime rates and struggling commercial landscape. With over 144 business closures per 1,000 businesses, the survival rate for enterprises is low.
Security concerns are also prominent, with 9 shoplifting incidents and 2 non-residential burglaries per 1,000 businesses.
Included in the bottom 10 are; Coventry; Newport; Wolverhampton; Leeds; Manchester; Northampton and Newcastle upon Tyne.
Location, location, location is just as important for commercial property investors as it is for residential.
