InFocus: psd’s view of the Commercial Real Estate Sector in 2024

Commercial real estate has faced several challenges in 2023, but most predicters think that a recovery is expected in 2024, albeit at a slower pace than most would prefer.

This is due to several factors, including continued uncertainty around interest rates, inflation, and the economic environment. Industrial and logistics are expected to be the strongest performing sectors in 2024, primarily due to the growth of e-commerce and the insistent need for businesses to have efficient supply chains.

Demand for industrial and logistics space remains strong in major urban areas, where businesses are looking to locate near major transportation hubs. Rents for industrial and logistics space are expected to remain high in 2024.

The healthcare and life sciences sector is expected to see continued growth due to the ageing population and rising demand for healthcare services. This sector requires substantial space for research, development, and manufacturing, creating a robust demand for commercial premises.

The rise of flexible working space will continue. Businesses are increasingly seeking flexibility in their workspace needs. Co-working spaces provide a shared workspace with access to meeting rooms, conference facilities, and other amenities. Flex office spaces offer short-term leasing options, catering to businesses that are either expanding or downsizing. The traditional office market is still recovering and it is unclear if demand will ever return to pre-pandemic levels. Many businesses have shifted to hybrid working and have, as a result, considered downsizing their office space. The UK retail sector has been struggling for some time, and this is expected to continue in 2024. The rise of e-commerce has led to a decline in foot traffic in many retail stores. As a result, many retailers have closed stores or downsized their operations.

In mainland Europe it is a slightly different picture. Pan-European real estate investment volumes to bounce back in 2024 as the continent’s economy recovers and most analysts seem to be anticipating a total transaction volume up 35% on the €163bn forecast for 2023.

As both lenders and investors start to adapt to the new environment of higher interest rates, debt cost and yields, most experts believe that we will witness a slight recovery of investment activity during 2024 notably in the European office market, in particular through sustainability initiatives or by buying from those who have to sell.

History shows that deals pursued during challenging times often yielded superior returns in the long run. This is many brokers, analysts and investors think that retail will continue to fare better than other sectors in 2024, perhaps. A surprising conclusion perhaps but many seem to anticipate further yield expansion in the sector, especially for shopping centres and retail warehouses.

psd has recruited in the Real Estate sector for 30 years and operates at Board and senior management level. For further details please contact Peter Hardy, Managing Director at and 020 7970 9701.


Peter Hardy

Managing DirectorProperty & Construction

Insert a short description of the consultant here (you can copy it from the consultant’s profile). Also, remember to add the correct link to the consultant’s profile to the “See profile” button below.