The Growth from Knowledge consumer confidence index is at an all time low since records began in 1974. That's lower than during the global banking crisis of 2008, lower than when the UK was faced with the initial impact from Brexit and lower than during the Covid lockdowns. The index in compiled based on monthly surveys of individuals from a wide range of social and economic backgrounds. The individuals are asked to consider matters such as how their financial position (and separately the UK's general economic situation) has changed over the preceding 12 months, how they expect it to change over the next 12 months, whether they think it is a good time to make major purchases and whether they think it is a good time to save.

What does this mean for the world of commercial real estate?

Looking at the retail sector, the increased cost of production (especially with increasing energy prices and the shortage of materials), cost of employment (with increased national insurance contributions) and occupational costs (both direct and through service charge contributions fuelled by energy price rises) is being met with reduced consumer spending as the public tighten their belts in readiness for what is expected to be a hard winter. Despite - as reported by the Guardian - a small uplift in consumer spending in July (possibly resulting from the holiday season and the purchase of heatwave essentials - but most likely resulting from inflation rather than the number of items actually sold), there is expected to be a general downwards trend during the latter part of this year.

Other businesses will be feeling a similar pinch, which could affect offices and other commercial property lettings. 

However, whilst starting to drop, the business confidence index is still relatively high. Shop vacancy rates continue to fall whilst online sales are also falling, which suggests a continued shift to in-store shopping. In addition, the central London office market has remained stable during the second quarter of this year. Combined with the uncertainty of the UK Government leadership change, it is difficult to predict what is in store for the commercial real estate market over the next 6 months.