There are reasons to be optimistic about the state of the commercial real estate (CRE) market in 2025 and beyond.
Tom Renwick, head of business banking at Atom Bank, said: “We expect small business lending to recover as lower interest rates increase borrowing appetite and allow businesses to expand and invest,” he said. 
He added: “While there is optimism about the improvement in CRE, we should expect to see significant variation in the recovery across sectors.” London's tourism industry has been incredibly strong this year, with an expected increase in inbound stays, so investors may be more keen to support hotels than in previous years.
“Meanwhile, the rise in remote and flexible working arrangements will have an impact on the office market, while the lack of quality office space and the potential increase in office-based employment will drive rents down in the sector. It is suggested that there is a possibility of an increase.”
Richard Harrison, Head of Home Loans at Atom Bank, commented: The layers of complexity in the UK's planning system mean that the country has not been able to build enough homes to meet demand for decades. This housing shortage is directly contributing to a significant increase in home prices, making home ownership an extremely difficult prospect for many first-time buyers. ”
He added: “While lenders need to be more accepting of new-build buyers and show more flexibility, particularly around maximum LTV, I would also like to see higher levels of support for those with small deposits. There is,” he added.
“The rate of house price growth, soaring rents and the removal of Help to Buy schemes are making it harder for aspiring homeowners, but first-time buyers need access to the housing ladder. Governments must deliver on their construction commitments, but lenders also have a responsibility to be innovative in how they provide the necessary support.
“While there has been a small credit crash due to cost-of-living challenges in recent years, more borrowers are now in the near-prime category. An FCA analysis last year found that around six million Brits were in arrears with their payments, but if these problems were temporary, they may now be looking to take out mortgage financing. Given the number of prospective borrowers involved, we, as an industry, need more financial institutions to help these customers not only meet their current needs, but also regain top status should improvements occur. There is a need.”
