After a turbulent few years of rising interest rates, pandemic-driven behavioural shifts, and remote working disruptions, the UK commercial property sector is finally showing green shoots of recovery.
As we move deeper into 2025, institutional and private investors alike are looking beyond London skyscrapers to emerging regional opportunities—especially in logistics, retail warehousing, and mixed-use regeneration projects.
According to Savills’ latest investment briefing, total commercial investment volumes are expected to hit £50 billion this year—up more than 12% from 2024. While office markets in some city centres remain in flux, there’s a noticeable rebound in several subsectors driven by changing consumer habits, ESG mandates, and a renewed appetite for real estate-backed yield.
The rise of sheds and logistics
No sector has benefited more from structural shifts in UK consumption than logistics. From the “Amazon effect” to Brexit-fuelled supply chain realignment, demand for last-mile delivery space and regional distribution hubs continues to outpace supply.
Top performing locations in 2025:
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East Midlands – Rapid growth around Leicester and Northampton.
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North West – Strong logistics corridor from Warrington to Greater Manchester.
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South Yorkshire – Emerging as an affordable warehousing hotspot.
Yields on industrial units are averaging between 5.5% and 7%, with longer-term lease agreements offering landlords income stability in uncertain economic conditions.
Retail warehousing: the quiet comeback
Despite the broader decline of high street retail, retail parks are quietly staging a recovery—particularly those with drive-to access, major supermarket anchors, and leisure tie-ins. With investors seeking defensive plays, well-tenanted retail parks in areas with above-average car ownership are proving surprisingly resilient.
Investor tip: Look beyond London. The South West, West Midlands, and parts of Wales are offering 6%+ yields on retail warehouse units with national brands as tenants.
Office space: flight to quality
The office sector remains polarised. Low-spec buildings are struggling, particularly in oversupplied commuter belt towns, but Grade A city centre offices—especially those with strong ESG credentials—are in growing demand.
Cities like Bristol, Birmingham, Leeds, and Manchester are outperforming London in yield and occupancy, driven by corporate relocations and hybrid working recalibrations.
A report from BNP Paribas Real Estate forecasts rental growth of 4.1% in prime regional office markets this year.
ESG and planning: shaping the future
Whether it’s a converted warehouse or a new city district, investors are now prioritising green credentials. EPC B+ ratings, solar integration, green roofs, and carbon offsetting schemes are no longer nice-to-haves—they’re required to attract tenants and qualify for institutional capital.
Equally important are local council planning pipelines. Cities that are actively supporting mixed-use regeneration (like Manchester’s £1.7 billion ID Manchester scheme) are seeing huge inflows from both UK and overseas buyers.
Outlook: resilience through diversity
For 2025 and beyond, commercial property success will rely on portfolio diversification, with savvy investors blending logistics, retail, and regional office exposure.
As interest rates settle and inflation subsides, the hunt for stable, real asset-backed returns will only grow stronger—and UK commercial property, once again, is firmly on the radar.
