After several years of disruption, the UK property market is entering a more constructive and, crucially, more predictable phase. While global geopolitical tensions continue to weigh on confidence, economic and occupational fundamentals have shown a positive level of resilience.

Inflation, although still above target, is on a clear downward trajectory. After peaking again in mid-2025, CPI eased toward the end of the year and is forecast to fall below 3% during 2026, with further progress toward the Bank of England’s 2% target expected by year-end. Interest rate markets have responded accordingly. Four base rate cuts in 2025 helped restore confidence, and with further reductions priced in for 2026, funding conditions for both occupiers and investors are materially improved compared with recent years.

These macro trends are beginning to translate into real activity on the ground. Business failures declined by around 5% in 2025, commercial real estate lending volumes recovered meaningfully, and banks adopted a more constructive approach to the sector. This improved availability and pricing of debt should continue into 2026, supported by increased competition from alternative lenders as confidence builds.

From an occupational perspective, the industrial market – particularly logistics – is showing early signs of a cyclical recovery. Big box logistics take-up in 2025 was around 11% ahead of the prior year, as a renewed emphasis on supply-chain resilience drives a shift toward onshoring across Europe and the UK. This is particularly evident in strategic defence, technology and large-scale retail, where occupiers are seeking greater control over inventory and distribution networks. Recovery in the big box market is also expected to feed through into the mid-box and multi-let industrial sectors over time, supporting occupational demand across the broader industrial spectrum.

Looking ahead to 2026, we expect occupiers to be able to make more considered decisions about their property requirements as uncertainty lessens. While challenges remain, the combination of moderating inflation, a supportive interest rate environment and strengthening occupational demand points to 2026 becoming a year of gradual improvement for the UK’s property sector.

You can see all of the available commercial property listed by Sandyford Properties on NovaLoca here.

www.sandyfordproperties.co.uk

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