Demand in terms of both leasing and investment for commercial real estate in the UK largely remained in positive territory in Q4 2025, despite the uncertainty caused by November\u2019s Budget, according to Rightmove\u2019s latest Commercial Insights Tracker.<\/p>\n\n\n\n
Growth in demand was lower than in both the previous quarter and the same period in 2024. However, this was in part down to the timing of – and extensive speculation about – the Labour government\u2019s second Budget, which took place unusually late on 26 November.<\/p>\n\n\n\n
How did demand for commercial property perform in Q4 2025? <\/h2>\n\n\n\n
Demand to lease industrial property increased the most year on year, at 11%, followed by offices (2%) and leisure (1%). Leasing demand for retail properties fell by 4% over the same period. When it comes to investment demand, industrial fared best at a 12% increase, followed by offices (4%) and retail (3%). Demand for leisure fell by 7%.<\/p>\n\n\n\n
What trends did we see in supply of commercial property? <\/h2>\n\n\n\n
At the same time, supply across all sectors ticked up when it came to leasing and all but leisure in terms of investment. At a time when demand is muted – or at least more muted – this is, perhaps, to be expected.\u202f <\/p>\n\n\n\n
How has the office sector fared in 2025? <\/h2>\n\n\n\n![\"Exterior](\"https:\/\/www.rightmove.co.uk\/commercial-property\/news\/content\/uploads\/2026\/01\/AdobeStock_116862478-1024x645.jpg\")
<\/figure>\n\n\n\nDemand to lease office space in some of London\u2019s key business locations dropped by more than the national average, another signal that some business leaders adopted a wait and see approach at the end of 2025 due to the Budget – although this could also be due to tight supply at the prime end of the market.<\/p>\n\n\n\n
Demand to lease office space in the City of London dropped by nearly a quarter compared to the same period a year ago (-24%), while in Westminster there was a drop of 8%.<\/p>\n\n\n\n
What did the Budget include? <\/h2>\n\n\n\n
There was speculation in the months leading up to the Budget that there would be significant changes to the tax code, giving business leaders a reason to wait and see what would happen. <\/p>\n\n\n\n
The Budget did indeed include a major shake-up of business rates. From April 2026, a new five-category multiplier structure will apply. Perhaps most prominently, it introduced a clear distinction between retail, hospitality and leisure properties and all other commercial properties, as well as a new band for high-value premises.<\/p>\n\n\n\n
What do commercial property experts think about the commercial market? <\/h2>\n\n\n\n
\u201cIt seems that uncertainty in the run up to the Budget suppressed demand in some areas, but it\u2019s positive that it mostly continued to grow year-on-year,\u201d said Andy Miles, managing director, commercial, at Rightmove. \u201cSome business leaders understandably delay their decision making when potentially large financial changes are just around the corner.\u201d <\/p>\n\n\n\n
Ali Rana, head of national investment at consultancy Carter Jonas, noticed the fall in activity well before the Budget took place. \u201cConcerns surrounding the forthcoming November Budget are dampening transaction activity,\u201d he told BE News<\/em>\u202fat the start of November.\u202f <\/p>\n\n\n\n\u201cUncertainty over potential tax changes and business rates reform is prompting some investors to delay decisions until policy clarity emerges. Nonetheless, stabilising rental performance and improving yield dynamics are providing encouraging signs for 2026.\u201d <\/p>\n\n\n\n
Hesitancy also showed up in the RICS Commercial Property Market Survey in the run up to the Budget, with multiple respondents citing fiscal uncertainty.\u202f Chris Thomas from Christopher Thomas & Co was typical.\u202f\u201cConcerns about wider economic and fiscal outlook combined with questions over interest rates, stubborn inflation and a delayed Autumn Budget are stifling short term market activity,\u201d he told RICS. \u201cThis has created a \u2018wait and see\u2019 stage to the market cycle, primarily caused by weak, poor messaging and lack of direction by the current Labour administration.\u201d <\/p>\n\n\n\n
How will the commercial property market perform in 2026? <\/h2>\n\n\n\n
However, the consensus is that 2026 is set to be a more positive year for commercial property. \u201cWith interest rate expectations becoming more predictable and inflation appearing to have peaked, reduced development pipelines are helping to underpin a gradual recovery in investment activity, particularly in prime industrial assets and offices suited to refurbishment, repositioning or conversion to alternative uses,\u201d Rad Radev, associate researcher at Carter Jonas, told BE New<\/em>s. <\/p>\n\n\n\n![\"\"](\"https:\/\/www.rightmove.co.uk\/commercial-property\/news\/content\/uploads\/2026\/01\/AdobeStock_1404059278-online-version-1024x682.jpg\")
<\/figure>\n\n\n\nMiles agrees, noting that the Rightmove figures for the last quarter of 2025 remain robust, perhaps surprisingly given the uncertainty caused by the Budget. \u201cThere are positive signs ahead for the rest of 2026,\u201d he said.\u202f <\/p>\n\n\n\n
\u201cNot 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\u2019s 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.\u201d <\/p>\n\n\n\n
Darren Bond, Global Managing Director at Christie & Co, agrees. \u201cWe are optimistic about the market outlook for our specialist sectors,\u201d he says. \u201cThe 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.\u201d\u202f <\/p>\n\n\n\n
He adds: \u201cThere 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.\u202fAs long as demand remains at the current level, with bank funding readily available, then we see no reason why market sentiment shouldn\u2019t be maintained and even surpass the levels seen in 2025.\u201d <\/p>\n\n\n\n
At the same time, Christie & Co expects to see continued financial distress and an increase in non-performing operational real estate in the year ahead, fuelling demand for restructuring and insolvency services. <\/p>\n\n\n\n
\u201cEconomic challenges and financial pressures were catalysts for a rise in business distress in 2025,\u201d says Stephen Jacobs, Director – Bank Support & Business Recovery, at the company.\u202f <\/p>\n\n\n\n
\u201cWe expect these conditions to persist in 2026, presenting opportunities for well-funded and speculative investors to acquire non-performing operational real estate that will come to market as a consequence of business distress and failure.\u201d <\/p>\n\n\n\n
In normal times, this would have negative implications for commercial property, but Mat Oakley, Director, Commercial Research, at Savills, says that he doesn\u2019t believe that will be the case in 2026.\u202f <\/p>\n\n\n\n
\u201cWith November\u2019s Budget now finally out the way, in the short- to medium-term the outlook is certainly more stable than it has been for some time,\u201d he says. \u201cBusinesses and investors should now be more capable of making\u202fbalanced decisions than they were six months or a year ago, and therefore move forward with decisions about transactions.\u201d\u202f <\/p>\n\n\n\n
He adds: \u201cNonetheless, the environment for economic growth remains sluggish.\u202fIn a \u2018normal\u2019 cycle, this would feed through to weaker occupational demand across all the key commercial property sectors \u2013 offices, industrial and retail \u2013 however, a lack of supply and a dearth of construction activity is likely to keep demand robust.\u201d <\/p>\n\n\n\n
Sources:<\/strong>\u00a0<\/h3>\n\n\n\nRightmove Commercial Q4 2025 Insights Tracker<\/a><\/p>\n\n\n\nRICS Commercial Property Market Survey<\/a> <\/p>\n\n\n\n
<\/figure>\n\n\n\nDemand to lease office space in some of London\u2019s key business locations dropped by more than the national average, another signal that some business leaders adopted a wait and see approach at the end of 2025 due to the Budget – although this could also be due to tight supply at the prime end of the market.<\/p>\n\n\n\n
Demand to lease office space in the City of London dropped by nearly a quarter compared to the same period a year ago (-24%), while in Westminster there was a drop of 8%.<\/p>\n\n\n\n
What did the Budget include? <\/h2>\n\n\n\n
There was speculation in the months leading up to the Budget that there would be significant changes to the tax code, giving business leaders a reason to wait and see what would happen. <\/p>\n\n\n\n
The Budget did indeed include a major shake-up of business rates. From April 2026, a new five-category multiplier structure will apply. Perhaps most prominently, it introduced a clear distinction between retail, hospitality and leisure properties and all other commercial properties, as well as a new band for high-value premises.<\/p>\n\n\n\n
What do commercial property experts think about the commercial market? <\/h2>\n\n\n\n
\u201cIt seems that uncertainty in the run up to the Budget suppressed demand in some areas, but it\u2019s positive that it mostly continued to grow year-on-year,\u201d said Andy Miles, managing director, commercial, at Rightmove. \u201cSome business leaders understandably delay their decision making when potentially large financial changes are just around the corner.\u201d <\/p>\n\n\n\n
Ali Rana, head of national investment at consultancy Carter Jonas, noticed the fall in activity well before the Budget took place. \u201cConcerns surrounding the forthcoming November Budget are dampening transaction activity,\u201d he told BE News<\/em>\u202fat the start of November.\u202f <\/p>\n\n\n\n \u201cUncertainty over potential tax changes and business rates reform is prompting some investors to delay decisions until policy clarity emerges. Nonetheless, stabilising rental performance and improving yield dynamics are providing encouraging signs for 2026.\u201d <\/p>\n\n\n\n Hesitancy also showed up in the RICS Commercial Property Market Survey in the run up to the Budget, with multiple respondents citing fiscal uncertainty.\u202f Chris Thomas from Christopher Thomas & Co was typical.\u202f\u201cConcerns about wider economic and fiscal outlook combined with questions over interest rates, stubborn inflation and a delayed Autumn Budget are stifling short term market activity,\u201d he told RICS. \u201cThis has created a \u2018wait and see\u2019 stage to the market cycle, primarily caused by weak, poor messaging and lack of direction by the current Labour administration.\u201d <\/p>\n\n\n\n However, the consensus is that 2026 is set to be a more positive year for commercial property. \u201cWith interest rate expectations becoming more predictable and inflation appearing to have peaked, reduced development pipelines are helping to underpin a gradual recovery in investment activity, particularly in prime industrial assets and offices suited to refurbishment, repositioning or conversion to alternative uses,\u201d Rad Radev, associate researcher at Carter Jonas, told BE New<\/em>s. <\/p>\n\n\n\n Miles agrees, noting that the Rightmove figures for the last quarter of 2025 remain robust, perhaps surprisingly given the uncertainty caused by the Budget. \u201cThere are positive signs ahead for the rest of 2026,\u201d he said.\u202f <\/p>\n\n\n\n \u201cNot 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\u2019s 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.\u201d <\/p>\n\n\n\n Darren Bond, Global Managing Director at Christie & Co, agrees. \u201cWe are optimistic about the market outlook for our specialist sectors,\u201d he says. \u201cThe 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.\u201d\u202f <\/p>\n\n\n\n He adds: \u201cThere 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.\u202fAs long as demand remains at the current level, with bank funding readily available, then we see no reason why market sentiment shouldn\u2019t be maintained and even surpass the levels seen in 2025.\u201d <\/p>\n\n\n\n At the same time, Christie & Co expects to see continued financial distress and an increase in non-performing operational real estate in the year ahead, fuelling demand for restructuring and insolvency services. <\/p>\n\n\n\n \u201cEconomic challenges and financial pressures were catalysts for a rise in business distress in 2025,\u201d says Stephen Jacobs, Director – Bank Support & Business Recovery, at the company.\u202f <\/p>\n\n\n\n \u201cWe expect these conditions to persist in 2026, presenting opportunities for well-funded and speculative investors to acquire non-performing operational real estate that will come to market as a consequence of business distress and failure.\u201d <\/p>\n\n\n\n In normal times, this would have negative implications for commercial property, but Mat Oakley, Director, Commercial Research, at Savills, says that he doesn\u2019t believe that will be the case in 2026.\u202f <\/p>\n\n\n\n \u201cWith November\u2019s Budget now finally out the way, in the short- to medium-term the outlook is certainly more stable than it has been for some time,\u201d he says. \u201cBusinesses and investors should now be more capable of making\u202fbalanced decisions than they were six months or a year ago, and therefore move forward with decisions about transactions.\u201d\u202f <\/p>\n\n\n\n He adds: \u201cNonetheless, the environment for economic growth remains sluggish.\u202fIn a \u2018normal\u2019 cycle, this would feed through to weaker occupational demand across all the key commercial property sectors \u2013 offices, industrial and retail \u2013 however, a lack of supply and a dearth of construction activity is likely to keep demand robust.\u201d <\/p>\n\n\n\n Rightmove Commercial Q4 2025 Insights Tracker<\/a><\/p>\n\n\n\n RICS Commercial Property Market Survey<\/a> <\/p>\n\n\n\nHow will the commercial property market perform in 2026? <\/h2>\n\n\n\n
<\/figure>\n\n\n\nSources:<\/strong>\u00a0<\/h3>\n\n\n\n