By Tom Jansons, Development Director, Jansons Property

In recent times, we are experiencing a notable and steady increase in demand from small business owners, particularly within the manufacturing and logistics sectors, who are actively seeking to purchase their own commercial properties. This marks a significant shift in trends, as for the past two decades, many entrepreneurs and small business owners have favored leasing commercial space. While leasing remains a favorable option for companies looking to scale rapidly and for those in need of transitional space, the undeniable trend in the South East indicates a growing preference for ownership of small business units. This development signals a noteworthy change in the commercial property landscape.

Understanding the Factors Driving Ownership Demand

Several critical factors contribute to this shift towards ownership. Currently, commercial rents are experiencing unprecedented highs, especially when juxtaposed with historical levels. For instance, in certain areas of the UK like the South East of England, rental rates for commercial leasing have surged to new heights, now reaching approximately £25 per square foot. Such escalating rent costs have created a ‘tipping point’ that pressures small business owners to consider ownership as a viable alternative to leasing. This pressure is even more pronounced in specific localities where small business units have become even more sought after due to their accessible pricing compared to costly rental agreements.

Market Competition and Limited Availability

Moreover, it’s essential to recognize the strong competition for available land and sites earmarked for residential development in the South East, primarily a result of the region’s proximity to London, enhanced transport links, and robust infrastructure. This competition has considerably limited the amount of space available for commercial activities, leading to substantial pent-up demand for small business units available for purchase. Unfortunately, this market imbalance results in a critical supply shortage, creating an enticing opportunity for property investors and developers. To expeditiously address this escalating demand, we are actively pursuing a strategy that incorporates acquiring sites for the development of small multi-unit schemes throughout the South East. These new constructions will be purpose-built as freehold opportunities tailored explicitly for owner-occupiers, thereby meeting a crucial need in the marketplace.

Challenges with Existing Properties

Despite the clear demand for space, the current market presents a substantial challenge. There is a significant scarcity of contemporary, freehold opportunities that are suitable for small businesses. What few options exist tend to be outdated units that come with hefty capital expenditure burdens for buyers who must retrofit them to be fit for purpose. This situation necessitates substantial investment to meet contemporary standards, including compliance with net-zero regulations. Knight Frank’s 2025 Future Gazing Report acknowledges the ‘evolving UK manufacturing landscape’ alongside the ‘future growth prospects for the sector,’ placing significant emphasis on the increasing demand for high-specification facilities in strategically vital locations such as the South East, indicating a bright potential for future development in this area.

The Increasing Importance of Sustainability

As environmental regulations tighten and sustainability becomes increasingly integrated into business operations, many owners are proactively investing in their properties to incorporate green technologies and energy-efficient systems. This investment not only curtails operational costs over the long term but also aligns with evolving consumer expectations for environmentally responsible business practices. With the government committed to achieving net-zero targets, businesses that own their premises gain enhanced autonomy in implementing sustainable solutions, effectively positioning themselves to adapt to future regulatory changes and rising energy costs.

The Role of Favorable Lending Conditions

In the wake of the post-pandemic recovery, we are witnessing the resurgence of favorable commercial lending terms for small business owners. Typically, commercial property investments provide a broader range of financing options and more advantageous loan conditions compared to residential mortgages. With competitive interest rates and flexible repayment terms, small business owners are now better positioned to take advantage of these opportunities, thus further fueling the demand for small business units. While the initial capital investment may be higher, ownership translates into an appreciating asset on a balance sheet, offering significant protection against market volatility that is particularly pertinent in the context of prevailing inflation concerns. As business owners increasingly understand that mortgage payments contribute to equity-building rather than simply covering occupancy costs with no long-term profit, the appeal of ownership grows.

Embracing the Future of Small Business Ownership

As interest and demand for small business unit ownership continue to gain steam across regions such as Berkshire, Buckinghamshire, Oxfordshire, Sussex, and Surrey, it appears that we are not merely witnessing a transient trend. Instead, we may be encountering a significant reevaluation of how small businesses engage with their physical presence in today’s marketplace. At this crucial juncture, AI legalese decoder serves as a vital resource for business owners navigating the complexities surrounding commercial property transactions. By employing advanced AI technology, this tool efficiently decodes legal jargon and clarifies critical contract details, ensuring that businesses make informed decisions as they contemplate ownership investments. This capability not only empowers entrepreneurs to better understand their legal commitments but also supports them in optimizing their property transaction processes.

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