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2023: A view across 'traditional' commercial real estate sectors

Blog 2023 Forecast traditional sectors hero

In the third and final instalment of our 2023 Forecast blogs we are taking a look at the more traditional sectors of real estate – investment, debt, office, industrial and retail - as our experts lay out their predictions for the year ahead.

John Knowles, Head of National Capital Markets
A rough ride is to be expected in the early months of 2023, but also will offer good potential and opportunities for savvy and innovative investors. We have seen the UK markets being quick to reprice. With yields softening by 100-200bps across different sectors, optimism is building that investment momentum will return rapidly this year, provided occupier resilience proves robust against a wider economic recession. The demographically driven beds and sheds sectors remain good long-term prospects, although development will continue to be challenged by soft yields, income pressures and build cost inflation.

Laurence Richardson, Director in the Debt Advisory team
Despite greater geo-political and economic stability, volatile SWAP markets may fall further from the September peaks as the cost of living crisis bites, inflation falls and central banks adopt less aggressive rate policies. Funders are well-capitalised and have lent prudently since the GFC. Inflows are healthy and appetite for lending will grow. Nevertheless, there will be a continued flight to quality and ever greater scrutiny of income streams to service higher debt costs.

Asset pricing is shifting quickly to reflect higher funding costs, but we expect anchored-mindsets, quality product shortages and weight of capital to limit this adjustment. Leverage levels will be lower going forward to maintain acceptable debt yields, but lenders will need to moderate ICR thresholds in an increasingly competitive and fragmented market.

Alternative lenders will secure attractive risk-adjusted deals by virtue of their more flexible underwriting processes and risk analysis compared to traditional providers of finance. This will be especially true where owners fail to secure refinance terms from the incumbent lender owing to a stressed credit structure, rather than poor asset credentials.

Michael Hawkins & Dominic Pozzoni, National Offices 
Carbon sustainability is at the forefront of company and employee agendas and will increasingly influence decision making when considering relocations, regears and refurbishments. Increased utility costs will also place greater demand for Net Zero Carbon accredited buildings. Construction costs associated with repurposing and ground up development will create winners and losers in this competitive contracting arena.

Given robust demand for Grade A office space in key regional capitals, we anticipate headline office rents to increase in 2023. We also expect to see flex sector growth continue next year in response to steady demand from both SME and corporate occupiers.

Len Rosso, Head of Industrial
Greater efficiency and warehouse consolidation through supply chain restructuring will become business critical to drive long-term operational savings for most occupiers. Online sales volumes will remain elevated but heightened economic uncertainty will translate into muted demand from pure-online players. Third-party logistics providers are expected to account for the lion’s share of take-up activity as inefficient marginal logistics operations are outsourced.

On the supply side we will see grey space back on the market in 2023 as developers commit to fewer speculative construction starts due to weaker land and capital values which is challenging development appraisals. Rental growth is expected to remain positive, supported by the historically low level of supply and resilient occupational demand.

David Fox, Co-Head of UK Retail
The rising cost of living should impact discretionary spend in H1 2023 with direct consequences for occupational demand.

In strong locations, the trend for top performers (e.g. JD Sports, Zara, Flannels) is to take advantage of rebased rents and expand into larger stores. This will be a significant face of change on the ground and will drive demand for standard shop units, especially where post-COVID rebasing has already encouraged modest rental growth. This growth is likely to re-emerge in the second half of 2023. 

Out of town, strong demand for space from discounters and budget supermarkets is evident. The main barrier is lack of expansion space, competition from residential development and build costs. Pent up demand, though, is likely to mean any moderation of development costs will lead to competition across the market.

Related Experts

John Knowles

Head of National Capital Markets

National Capital Markets

London - West End

A highly qualified real estate professional, John has extensive knowledge of direct and indirect real estate and finance projects in Europe and Asia.

Prior to joining Colliers, John was MD Corporate Finance at DTZ and Head of Capital Markets at LSH. He has worked extensively in distressed debt and NPL situations and has concluded transactions in the last 12 months for Cerberus, Starwood and LBG.

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Laurence Richardson


Debt Advisory


Laurence is a Director at Colliers International in Jersey, where he joined the team in 2016.

He specialises in institutional and corporate debt financing. Working across all parts of the debt stack, and all real estate asset classes, he is passionate about structuring creative credit solutions to further a client’s investment objectives and maximise target returns.

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Michael Hawkins

Director- Head of National Office Agency and Development UK Regions

National Offices


I have over 28 years experience in the Real Estate profession, focused on the North West of England but with particular emphasis on Manchester City Centre. Ten of those years was as lead Director of Lambert Smith Hampton’s Office Agency Department and after that ten years as the Principal Development, Investment, Office Agency Director at my own firm WHR. Based in Colliers Manchester office I offer a depth and breadth of commercial experience to Investors, Developers, Landlords and Occupiers with particular regard to complex mixed use scheme with a focus on procurement of Planning, Development, Letting and Disposal of City Centre office schemes. I deal with all aspects of office agency where I have been one of the principle protagonists for the evolution of Manchester’s City Centre office market. My role includes providing Developers / Investors a unique insight into occupational requirements and how they should and will influence the design criteria of complex refurbished projects as well as ground up new build schemes. I pride myself in delivering performance for Colliers clients in a competitive market place.

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Dominic Pozzoni

Head of Manchester Office

National Offices


Dominic is a Director of the National Offices Team in Manchester, with 25 years experience in the Real Estate profession, focused on the North West region. Dominic offers a depth and breadth of commercial experience to Investors, Developers, Landlords and Occupiers with particular regard to offices and complex mixed use schemes. He has a focus on procurement of Planning, Development, Acquisition and Disposal of office, leisure and mixed use developments. Strong working relationships have been formed with a wide and varied contact base of key landowners throughout the North West which has resulted in a robust track record of delivering performance for Colliers clients in a competitive market place. 

Dominic leads the Manchester Office Leasing Agency team and has an excellent track record of maximizing clients asset’s value by advising on asset management strategy, building refurbishment and occupational requirements.

Dominic was during the period from 1993 to 2004 a Partner at Manchester based Edwards & Co Chartered Surveyors. Extensive experience was gained in advising property developers, funds and occupiers on their commercial real estate portfolio.

From 2004 to 2016 significant development experience was achieved as Director at a major North West based commercial property developer and investment company. This role involved managing many key development projects and land acquisitions / disposals for mixed use developments, residential, commercial and hotel uses. The role allowed him to work closely with Local Authorities, planners and numerous professional consultants.

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Len Rosso

Head of Industrial and Logistics

Industrial and Logistics

London - West End

Len has more than 30 years' experience in the commercial property sector. Having started out as a trainee surveyor in 1983 he moved on to set up Jansons in 1990, a niche agency specialising in industrial in North and West London. In 2004/5 the business was voted Industrial Agency of the Year, this being the first ever non West End national practice to have won this prestigious award. In that same year the business transacted in excess of 3.5 million sq ft which accounted for in excess of 50% of the total transactions for the North and West London market.

Since joining Colliers International, as the Head of the UK Logistics and Industrial Department, the objectives are the same as always, to outperform all competitors whilst providing the highest level of service to all our clients. In 2018, the Colliers International UK Industrial & Logistics team completed over 250 deals totalling over 15 million sq ft. 

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