UK commercial property demand remained largely resilient in the final quarter of 2025 despite uncertainty created by November’s Autumn Budget, according to Rightmove’s latest Commercial Insights Tracker.
Both leasing and investment activity stayed in positive territory, even though growth eased compared with the previous quarter and the same period last year.
This slowdown was partly attributed to the unusually late timing of the Budget and months of speculation around potential changes to the tax and business rates regime.
In the run-up to the Budget, many occupiers and investors delayed decisions amid expectations of significant fiscal reform. This caution was particularly evident towards the end of the year, as businesses waited for greater clarity before committing capital.
ROBUST ACTIVITY
Despite these headwinds, overall activity in Q4 remained robust, underlining continued demand for commercial space and investment opportunities heading into 2026.
Andy Miles, managing director of commercial property at Rightmove, says: “It seems that uncertainty in the run up to the Budget suppressed demand in some areas, but it’s positive that it mostly continued to grow year-on-year.
“Some business leaders understandably delay their decision making when potentially large financial changes are just around the corner.”
ATTRACTIVE INVESTMENT
He adds: “There are positive signs ahead for the rest of 2026. Not only is demand largely higher than last year, but we are expecting to see further interest rate cuts starting later this year, which would help to make commercial property investment more attractive and viable to some investors.
“It’s still a difficult cost climate for many businesses, but stable demand to lease commercial space and interest rate reductions for investors would help to create some momentum for the 2026 market.”
BUSINESS RATES OVERHAUL
The Autumn Budget confirmed a major overhaul of the business rates framework, with a new five-category multiplier system coming into force from April 2026.
The reforms draw a clearer distinction between retail, hospitality and leisure assets and other commercial properties, while introducing a separate band for high-value premises.
Industrial assets continued to dominate demand. Leasing demand for industrial space rose by 11% year on year, while investment demand increased by 12%.
Office demand saw more modest growth, with leasing up 2% and investment up 4%.
Office demand saw more modest growth, with leasing up 2% and investment up 4%, while retail leasing demand fell by 4% despite a 3% rise in investment demand. Leisure demand declined across both leasing and investment.
INCREASED SUPPLY
At the same time, supply increased across most sectors, reflecting a more cautious environment in which buyers and occupiers remain selective. In funding terms, this has helped maintain deal flow, particularly where speed and flexibility remain key.
Office leasing demand in parts of central London fell more sharply than the national average, with demand in the City of London down 24% year on year and Westminster down 8%, suggesting a combination of fiscal uncertainty and tight prime supply.
OPTIMISTIC OUTLOOK
Darren Bond, global managing director at Christie & Co, said: “We are optimistic about the market outlook for our specialist sectors. The visibility and pipeline of transactions anticipated to happen in the first half of the year are encouraging when compared with the same period a year ago.
“There is no doubt that cost pressures will continue to put a strain on businesses, and the economic environment will be more challenging in the year ahead.
“As long as demand remains at the current level, with bank funding readily available, then we see no reason why market sentiment shouldn’t be maintained and even surpass the levels seen in 2025.”
