The UK is one of the biggest European commercial real estate markets, however, many businesses are unable to keep up with the increasing commercial rents.
In fact, data compiled by the Local Data Company revealed a staggering 17,219 retail shops closed last year – equal to 47 closures a day[1].
Cities in particular have struggled with rising rent costs and following effects of the pandemic in comparison to commuter towns and villages where commercial rent is often lower.
How much is commercial rent in the UK?
Analysing three types of commercial rent, retail, prime office and industrial, the research has shown that London has come out on top for all three, with the prices reaching as high as £2,150 per square foot per year for retail space.
However, Manchester is not far behind areas of London within the retail sector, as some plots reach as high as £220 per square foot per year – just £20 less than City of London.
But areas in the midlands are also seeing high commercial costs in comparison to the rest of the country, with retail spaces in Birmingham going for £180 per square foot[2].
| Retail | Cost (Per square foot) Q2 2021 |
| London (West End – Bond Street) | £2,150 |
| London (West End – Oxford Street) | £675 |
| London (City) | £240 |
| Manchester | £220 |
| Birmingham | £180 |
| Cardiff | £140 |
| Leeds | £140 |
| Bristol | £95 |
For prime office space, there was an increase in cost between Q4 2020 and Q4 2021.
Birmingham was revealed as the most expensive area outside of London for prime office rent, with offices costing on average £39 per square foot per month.
This means that commercial tenants could pay over £460 per square foot per year in the west midland city.
Mahmud Shahnawaz, founder of social enterprise, The Utilize Project (TUP) adds that prime office rental space is almost £50 per square foot per month in London’s business hub, Canary Wharf.
“Many SMEs and start-ups are increasingly struggling to have their start in the city, meaning hundreds of community opportunities, jobs and local economies are being restricted.”
| Prime Office | Cost (Per Square Foot) Q4 2021 |
| London (West End) | £110 |
| London (City) | £70 |
| East London | £40 |
| Birmingham | £39 |
| Edinburgh | £38 |
| Bristol | £38 |
| Manchester | £38 |
| Glasgow | £35 |
| Leeds | £34 |
| Newcastle | £26 |
Overall, industrial rents are the cheapest type of commercial rent per square footage, with prices as little as £7 in Scotland. However, they tend to be much larger, with some big box warehouse units as large as 100,000 square feet.
Industrial commercial rent is also highest outside of the capital across areas in both the west and east midlands, reaching almost £9 per square foot per year.
| Industrial | Cost (Per Square Foot) Q1 2022 |
| London + South East | £16.75 |
| West Midlands | £8.75 |
| East Midlands | £8.60 |
| North West | £7.75 |
| Yorkshire + The North East | £7.50 |
| South West + Wales | £7.50 |
| East of England | £7 |
| Scotland | £7 |
How can businesses compete with the rent increases?
There are still ways in which businesses can compete with rising commercial rental rates.
Meanwhile spaces offer prime commercial rental space at discounted prices, allowing smaller businesses and all-important community groups to have a temporary home and kickstart growth.
Shahnawaz from TUP explains, “Landlords and developers face pressures from local councils to fill empty spaces and avoid empty space charges, meaning rental rates are usually heavily reduced.”
“Our meanwhile spaces can charge as little as £1 per square metre in the capital, and so rent becomes much more accessible for a wide range of businesses.”, he adds.
As commercial rent increases and brick and mortar spaces become less achievable, Shahnawaz sees the meanwhile space sector growing across the entirety of the UK.
