Nick Lloyd, head of investment at property consultancy Lambert Smith Hampton, said leases signed during the economic expansion of the late 80s and 90s will expire within the next few years, telling Insider Media this will mean there is an excess of real estate on the market.
London business property and buildings in the south-east are particularly at risk, he warned, saying less popular locations will be worst hit by the imbalance of supply and demand.
However, quality commercial property to rent in more remote locations may yet enjoy strong interest, as investors are less willing to accept declining standards in the squeezed London real estate market.
"It will work in concentric circles radiating out. The regional capitals, the historic centres of excellence, like Reading and Heathrow, have already seen the benefit of that and gradually, especially towards the end of this year and into next, other areas will benefit … like the wider Thames Valley, the M3 corridor, St Albans, Guildford, Chelmsford, Watford and parts of Kent," the expert revealed.
Business property to buy might be popular if it is located near infrastructure benefits, such as Heathrow Terminal Five or the proposed Crossrail plan, which could see 118km of track run between Maidenhead and Abbey Wood, reducing the commuting time of 1.5 million people to less than 45 minutes for central London.
Difficulty securing finance for residential property conversions could also see office investment property lying unused, Mr Lloyd observed, as buildings that would normally be in demand for redevelopment will lack construction experts with the required capital.
Despite this, investment property activity will be strong until 2013, he predicted, with the south-east enjoying a 57% jump in deals last year, the biggest increase of any region.
Posted by Suzannah Taylor