Investors are increasingly exploring commercial property opportunities over the residential sector, according to NAEA Commercial Propertymark’s Advisory Panel.
Reflecting on market conditions during 2026 so far, panel members said rising tax and regulatory and compliance obligations affecting residential landlords are prompting some investors to reassess their portfolios and consider commercial assets.
While commercial property presents its own challenges, including higher entry costs and more complex transactions, advisers are seeing increased enquiries from investors seeking to diversify or transition away from residential investment.
Michael Sears, member of the NAEA Commercial Propertymark Advisory Panel, said: “Interest seems to be building from investors wanting to invest in commercial property over residential, mainly because there is less of a legislative stranglehold.
“Investors tend to often be those converting their residential portfolios to commercial as the entry barrier financially to commercial is generally higher, with lower loan-to-value lending typically available.”
Commenting on current market conditions, Sears said the retail sector across Kent continues to perform strongly, with healthy levels of demand meeting an ongoing shortage of available stock, resulting in properties being let or sold within relatively short timescales.
He added: “Industrial and warehousing remain equally as buoyant, with prospective tenants matched to property in short timescales.
“Large open-plan offices continue to struggle, although both supply and demand remain low. Small offices in business centres, however, continue to perform well.”
GROWING APPETITE
Commercial agents are reporting an increase in enquiries from investors considering commercial assets. Looking at Propertymark’s most recent Commercial Outlook Report covering Q1 2026 found that investment yields in the leisure and land and yards sectors increased between Q4 2025 to Q1 2026.
Steve Lane, member of the NAEA Commercial Propertymark Commercial Advisory Panel, said that while demand from larger national retailers remains subdued, some independent operators continue to drive activity within the retail market.
“At present in the retail arena, demand from the large multiples for the larger units remains subdued whereas, in contrast, some independent operators remain active,” he said.
He noted that increases in rateable values and employment costs have affected business confidence, although many occupiers continue to commit to commercial premises despite these pressures.
Lane added: “The industrial sector continues to be resilient, and the office sector overall remains muted but with more activity for the letting of smaller offices and suites.”
ACCESS TO FINANCE AN OBSTACLE
He also highlighted a notable shift in investor behaviour.
“An interesting market trend is that we are seeing fresh investors seeking more in-depth advice where they are considering pivoting and perhaps investing in commercial property rather than residential property due to the changes in the private rental sector.
“Many of these investors need guidance on the differences between the tax and regulatory structures of the two markets. This includes borrowing ratios, tax liabilities, and regulatory obligations.”
Lane said there also remains encouraging demand from owner-occupier businesses looking to purchase their own freehold commercial premises rather than continue leasing.
However, he cautioned that access to finance remains a significant obstacle.
“The challenge is that although owner-occupier buyers have a genuine appetite to purchase, they are experiencing much more cautious lending than they would often expect,” he added.
