- Market still subdued, but sentiment edges up
- Prime assets begin to regain confidence
- Secondary offices and retail remain under pressure
The UK commercial property market remained subdued in the final quarter of 2025, but fresh research suggests the long downturn may be starting to ease.
The latest UK Commercial Property Monitor from Royal Institution of Chartered Surveyors found a modest improvement in sentiment across both occupier and investment markets, pointing to early signs of stabilisation rather than a full recovery.
Around 32 per cent of contributors said market conditions now resemble the early stages of an upturn, compared with 27 per cent in the previous quarter.
Occupier sentiment showed a slight improvement, with the occupier sentiment index rising to -10 from -12, suggesting the pace of decline is easing.
Tenant demand, however, remained negative overall. Retail saw the sharpest fall, while offices and industrial property recorded smaller declines. Across all sectors, available space continued to rise, although survey respondents said the rate of increase had begun to slow.
Rental expectations offered one of the clearer signs of resilience. Prime office rents are forecast to rise by 2.5 per cent over the next 12 months, while prime industrial rents are expected to increase by 2.1 per cent. Secondary assets, by contrast, remain under pressure.
Prime assets regain some ground
Investor sentiment stayed in negative territory, with the investment sentiment index at -9, though this marked a slight improvement on the previous quarter. Investor enquiries were described as weak across offices, retail and industrial property.
There was some encouragement on the finance side. Lending conditions improved, with the credit availability indicator turning positive, suggesting access to borrowing is gradually becoming easier.
Capital value expectations were revised higher for prime assets. Prime industrial values are expected to rise by 2 per cent over the next year, while prime office values could increase by 1.9 per cent. Secondary office and retail values are still forecast to fall, highlighting the growing gap between prime and non-prime property.
London was seen as more resilient than other regions, particularly for prime office and retail assets, with rental and capital value growth expectations above national averages. Other sectors such as aged care, multifamily residential, student housing and life sciences are expected to deliver smaller but positive growth.
Tarrant Parsons, head of market research and analysis at RICS, said the findings suggest the market is “beginning to find its footing” after a long period of adjustment, as quoted in a news report. He reportedly added that while near-term conditions remain soft, improved expectations for prime rents and values point to greater confidence in the medium-term outlook, though high financing costs continue to limit the pace of recovery.
