But Singh says this drop in valuations was not the result of a significant drop in demand from tenants, and that with commercial property down 20 per cent, it may be that the trough in valuations was reached in the third quarter of 2022.
He agrees that a unique feature of the market right now is that divergence between sectors, but says valuation also played a role in this, as some of the better performing sectors sold off in the wake of the "mini"-Budget as investors sought to raise cash.
But with property values having, in his view, stabilised, he says that divergence is returning.
When it comes to offices, Singh says he believes the “flight to quality” is not merely a function of investors being cautious and so choosing to invest in blue chip assets, but a function of company management taking the view that headquarters will need to be high end and modern; regional offices may no longer be needed as staff work from home.
Singh says: “The supply of those high-quality offices, especially those that are compliant with energy efficiency regulations, is actually quite small, and companies are happy to pay up for them.
"The other thing you will see is that building owners will be more likely to refurbish their existing premises to make them premium than build new offices, and that could mean supply stays relatively limited.”
With this in mind he says the long-term trend is for premium locations to do well, and regional locations to do poorly.
Howard says the other area that has performed well of late is commercial warehouses used by online retailers such as Amazon.
He says this is the part of the market with the lowest level of un-let property in the UK right now, while high street locations remain the area with the highest level of vacant properties.
Dan Gollance, who runs multi-asset portfolios at Close Brothers Asset Management, says a key difference for investors looking at commercial property right now is the far larger number of potential investments.
He says: “Even in the GFC, you had a small number of large companies such as British Land and Land Securities and not much else. So you had to like the asset class.
"But now there are lots of alternative property companies where you can invest just in the bits you like. And for us, that is where all of our commercial property exposure is, in real estate investment trusts that invest in things such as supermarket premises.”
