How big is the SME commercial property market?
We take a deep dive into the size of the SME commercial property market

Published: 15/11/2023

Small and Medium-sized Enterprises (SMEs) are the unsung heroes of the United Kingdom.

At Whozoo we help small and medium sized business owners buy, sell, rent and occupy small and medium sized properties.

SMEs are businesses that fall within a certain size bracket in terms of employees and turnover. In the UK, SMEs are classified as businesses with fewer than 250 employees and an annual turnover of less than £50 million. These businesses play a pivotal role in driving economic growth and innovation, as they are the engine of job creation and wealth generation. As of 2023, the UK had over 5.5 million SME’s (Source: Federation of Small Businesses), accounting for more than 99% of all businesses. These businesses come in various forms, including sole proprietorships, partnerships, and limited companies.

SMEs are the lifeblood of the economy, and their significance cannot be overstated.

But why do SME's matter?

Job Creation: SMEs are responsible for employing over 60% of the private sector workforce in the UK. Their ability to create jobs has a direct impact on reducing unemployment rates and improving living standards.

Innovation and Competition: SMEs are often hotbeds of innovation. They drive competition, leading to improved products and services in various industries. Their agility allows them to adapt quickly to changing market conditions.

Contribution to GDP: Despite their size, SMEs collectively contribute a substantial share of the UK's Gross Domestic Product (GDP). Their economic activities ripple through the supply chain, benefiting both large and small businesses.

Regional Development: SMEs are not limited to major cities; they operate in towns and villages across the country. This decentralization of businesses plays a vital role in promoting regional development and reducing economic disparities.

(Source: Federation of Small Businesses)

So when it comes to business premises for SME’s – we’re talking about the premises that they operate from. That could either be as the Freeholder or a Leaseholder. This is the SME commercial property market.

Small and medium sized business premises, owned or occupied by small and medium sized businesses or private individuals.

How big is the SME commercial property market?

We’ve spoken to all of the major data providers in the UK property sector including Costar, MSCI, Land Insight and some non-property specific data companies including the Local Data Company – and no one has any relevant data on the market size of the commercial property market. (Or nothing useful anyway). So we put our brains together to try and work out how big the SME commercial and development actually market is.

And with a lack of data we had to come up with our own data set.......

Our stance was to establish the total value of commercial and development properties currently on the market under a value of £5 million. (Why £5 million? Well we looked at the asset profile and client profile of transactions both on the market with Whozoo but also with other agents – and believe that anything under £5 million in value could sit within the SME market, while anything above that value – mostly probably didn’t).  We pulled data from the major commercial property platforms – Rightmove Commercial, Loopnet, Eg Propertylink, Zoopla, Novaloca and Onthemarket.

The current value of live listings across the portals under £5,000,000 is approximately £10 billion. 

But of course, as far as the total market size is concerned that doesn’t account for:
-       Properties that have already sold this year
-       Properties sold off market
-       Owners who do not want to sell yet
-       The total size of the commercial lettings market in the SME market

Using the residential market as a comparison, in 2021 there were approximately (15,500,000 homeowners in the UK (Source: ONS: Housing, England and Wales Census 2021) and 784,890 property transactions in the same year. (Source:GOV.UK/UK monthly property transactions commentary)

So if we utilise the total value of the live listings currently on the market across the portals of £10 billion, and assume that all of those properties transacted this year (I know they won’t, but bear with me) – and we use the same 5% figure from the residential market – that indicates the total market value of the SME commercial property market to be in excess of £200 billion.

Now we accept this is not a perfect science – and we’re still some way off truly understanding the size of the SME commercial property market in the UK – but with a lack of credible market data out there – we're having to be creative.

So the elephant in the room……

There is not one, single commercial property advisory business dedicated to this market.

With the focus of many surveying, agency and advisory businesses focused on bigger and bigger transactions – retail parks, shopping centres, BTL portfolios, city offices, the list goes on and on – who is looking out for the SME market? Ensuring the highest quality service is delivered.

For a market size in excess of £200 billion, we think it’s important that commercial property owners have a national brand that they recognise that they can trust to maximise value for them – don’t you?