As a commercial finance brokerage working with occupiers, investors and businesses across the UK, we are seeing a market that’s very far from one-dimensional. It’s a time of cautious optimism, selective opportunity and shifting dynamics. If you’re thinking of borrowing, investing, leasing or refinancing, now is a moment to be nimble and informed.
The macro headwinds (and tailwinds)
Let’s start with the big picture. Economic growth is modest; inflation has been running above target; borrowing costs remain elevated.
According to CBRE, the expectation in 2025 is for a more stable inflation environment and some easing of the base rate, supporting investment returns.
UK Real Estate Market Outlook 2025 | CBRE UK
On the financing side: debt availability remains selective.
Lenders are cautious. But the narrowing gap between property yields and gilt yields is a signal worth watching.
Commercial Market Outlook | Carter Jonas
In short: the backdrop isn’t as frothy as the boom years, but neither is it fully frozen. If you have a strong proposition, you can find opportunities.
Sector-by-sector: where the gears are turning
Here’s how things are shaping up across the main commercial property sectors and what that means for clients.
Industrial & logistics
This remains one of the strongest performers. Rental growth is positive, occupier demand solid (though not without pressure).
Capital value growth is respectable. For example, annual growth to May 2025 for industrial assets was around +5.2%.
For businesses looking to lease warehouse/distribution space or investors seeking a relatively resilient asset class, this is one to watch.
Retail
Not all retail is “dead” but you have to be selective.
Prime retail parks and high-street locations with strong footfall are doing better than secondary retail.
Retail capital growth was about +3.6% in the year to May 2025.
For clients: if you’re leasing a retail unit, location, format and tenant covenant matter more than ever.
Office
This is the trickiest. The office market is still under pressure: capital values for offices were down ~-2.3% over 12 months to May 2025.
That said, there are glimmers of recovery: demand rising in major cities, premium fit-outs commanding attention.
If your business is occupying or investing in office space, you’ll want to ask:
How good is this building (grade, ESG credentials, location)? How flexible is the lease/supply?
What it means if you’re a borrower / occupier
Working with your business or property investment, here are five key considerations you should keep front-of-mind:
- Asset quality and future-proofing matter
Lenders are placing increasing emphasis on things like ESG, sustainability credentials, building quality and future adaptability. The market is rewarding “best-in-class” assets.
Colliers | Colliers releases 2025 commercial property predictions: Paradigm shifts to shape the market
If you’re occupying or buying property, aim for flexible space, good energy rating, location that works for the future.
- Terms still count more than headline yields
With yields stabilising and debt still tight, making sure your lease or purchase terms work for you is vital.
For investors, locking in upward-only reviews, credible tenant covenant and long lease length help.
For occupiers, focus on lease flexibility, incentives and control of future costs.
- Leasing vs buying: the traditional trade-off still applies
If you’re a business considering whether to lease or purchase your premises, the dynamics haven’t changed but the context has.
- If your business is stable, you know where you’re going and you want control, buying may reward you as markets recover.
- If your business is growing, changing or uncertain about location/size, leasing still gives you flexibility.
Market recovery is patchy, so aligning your property decision with your operational strategy is more important than ever.
- Finance structuring is key
As a finance broker, I’m seeing more clients needing tailored solutions: bridging finance, mezzanine, interest-only, transitional financing.
Given cost of debt and tighter covenants, working the structure to suit your deal is often more important than getting “the cheapest rate”.
- Timing is about execution, not just picking the bottom
Many clients ask “Is now the bottom of the market?”
My answer: maybe but the market will never wait for “perfect timing”.
Better to act when you’re ready with the right asset, the right plan, the right finance.
The data show we might have reached the trough of value declines in many sectors and we’re seeing signs of recovery.
What I’m advising clients right now
- If you’re looking to occupy new space:
Think “future-proof”. Be selective on building quality, flexibility and location. Negotiate forward-fitting incentives.
- If you’re refinancing or extending lease/purchase terms:
Now could be a sweet spot debt markets are opening, but competition is still moderate.
- If you’re looking to invest:
The “recovery” theme is real but differentiation is crucial. Standard, old asset + high acquisition price = bigger risk. Premium, well-located, sustainable asset = more upside.
- If you’re unsure about commitment:
Consider hybrid solutions (e.g., shorter lease with option, lease-purchase, adaptable workspace) to retain flexibility.
A closing word: why now is interesting
We’re not in the frothy “buy everything” boom of years past.
But that’s precisely why now is interesting.
There are fewer irrational prices, more room for negotiation, and a clearer dividing line between “good assets” and “risk assets”.
As your commercial finance broker I’m here to help you interpret these shifts, structure the right finance and execute with confidence.
Whether you’re occupying, investing or refinancing the choices you make now will reverberate through the next 5–10 years.
If you’d like to run through your property strategy, discuss finance options or model “what if” scenarios, let’s schedule a call.
