It has, at last, stopped raining. Tonight, sunset is scheduled at 5.52pm. Astronomical Spring is only a fortnight away. These are undoubtedly very good reasons to be cheerful. 

And it doesn't stop there. At least not for those with a finger in the UK's real estate capital markets pie.

JLL's recently published UK Capital Markets & Outlook reports that 2023 saw a drop in commercial property investment of more than a third when compared to 2022 levels and, at only £31.3 bn, the lowest annual total since 2012. Ouch.

Look ahead however and, whilst not necessarily golden, the future as we move through 2024 is certainly more promising. The OBR's latest inflation forecast, an anticipated interest rate cut in Q2 and expectations of stable or keener pricing in many sectors over the next 12 months are all confidence boosting ingredients. And whilst offices may not exactly be the industry's darling right now, many are predicting the London office market will present the greatest opportunities over the next cycle.

But scratch below the headlines and here's the rub. As JLL's Julian Sandbach points out, the capital, much of it now coming from the US, is increasingly “discerning”. Put simply, it is able to judge what is good and what is bad.   

Obsolescence - “the state of being which occurs when an object, service, or practice is no longer wanted even though it may still be in good working order” - in our built environment is self-evidently bad. Occupiers are demanding ever higher quality space and facilities consistent with their own ESG agendas and net zero targets. Regulatory requirements and industry bench-marking for sustainability are getting progressively and rapidly more stringent and complex.

The mood of the market hinges on its developers creating the very best-in-class product and its investors investing in substantial refurbishment and upgrade. Supply hitting demand. Get that right and there are indeed reasons to be cheerful.