The Intermediary – June 2025 - Flipbook - Page 44
SPECIALIST FINANCE
Opinion
Why the quiet
winner is now
semi-commercial
I
n a year that’s already
delivered a fair share of
market ups and downs, semicommercial property is quietly
growing in popularity. It’s
not the trendiest asset class.
It certainly doesn’t get as much press
as student accommodation. And not
every lender operates in this space.
But for brokers and investors looking
for flexibility and resilience, semicommercial property is looking like a
shrewd play.
That’s something we’ve seen firsthand. Brokers are coming to us with
clear intent – they’re not testing the
water, they’re ready to move.
While the Easter slowdown and
early May bank holidays are always
part of the cycle, the pace we’re seeing
now feels different. More focused.
More decisive.
Why now?
Semi-commercial – or mixed-use, as
it’s sometimes called – covers a wide
range of properties. Retail units with
flats above. Cafés with residential
space on site. Small local schemes
that blend commercial activity with
residential use. What sets them apart
is how they spread risk – two income
streams, two tenancy types. One
helps balance out the other. If a flat
sits empty, the shop below might still
be paying rent. If the shop becomes
vacant, the flats could still be let.
In a market where nothing is
guaranteed, that dual layer of income
provides something lenders and
borrowers alike can take comfort in.
A semi-commercial investment
relies on the performance of both the
residential and commercial elements.
While some investors may still have
concerns around the commercial
sector, the data suggests resilience
in key areas. According to Knight
44
The Intermediary | June 2025
Frank’s ‘UK Real Estate Navigator’,
published in early 2025, commercial
investment volumes hit £10.1bn in
Q4, the strongest quarter of the year,
and a 29% on Q3. Retail saw £2.3bn
in transactions, almost double the
average seen since early 2022, while
industrial and logistics reached
£2.9bn, their highest since mid-2022.
Office investment also picked up,
totalling £3.6bn.
That wider recovery maers. It
shows that investors are active again,
but they’re choosing their spots.
Income stability, asset resilience and
long-term potential are top of the list.
That’s exactly where semicommercial fits in. It blends
residential and commercial income,
oen with beer yields than pure
resi and less volatility than pure
commercial. In a market still
adjusting to rate shis and price
sensitivity, that dual-income profile
gives borrowers more flexibility
and lenders more confidence in the
underlying asset.
Not every lender
One of the quirks of the semicommercial space is that it’s not
universally serviced. Some lenders
avoid it altogether, viewing it as too
niche or too complex. Others may
struggle to price or underwrite mixeduse assets effectively, especially if
their teams are siloed between resi
and commercial.
For brokers, this creates a challenge.
You might have a perfectly viable
client with a good quality semicommercial asset, but you’ll need to
know where to go.
We’ve spoken to several brokers in
recent weeks who’ve said the same
thing: they want to place these kinds
of deals, and they know clients are
interested. But it’s a space that requires
GAVIN DIAMOND
is CEO at Inspired Lending
Income stability,
asset resilience and longterm potential are top
of the list”
confidence, both in the asset and in the
lender’s ability to assess it properly.
From our side, it’s an area we’re
comfortable with. We’re happy to look
at semi-commercial deals. And we’ve
built the flexibility into our process to
assess the whole picture, not just one
part of the property in isolation.
Solid option,
uneven market
Semi-commercial has emerged as
a practical route forward. It suits
this moment: a bit more flexible
than pure commercial, oen beer
value than standard resi, and still
offering meaningful returns. In this
environment, it stands out for its
balance. It doesn’t rely on one tenant
type. It isn’t tied to a single income
stream. And it offers investors the
chance to blend residential stability
with commercial opportunity.
For brokers, it’s a deal type that
can unlock options – especially if
you’re working with clients who
value diversification or are looking
to de-risk future income. For lenders
like us, it’s a space we’re very happy
to support.
Semi-commercial might not be
everyone’s focus, but right now, it’s
definitely having a moment. And
we’re here for it. ●
