Amy Selfe Associate Director at Landwood Group shares the company’s  latest commercial property insights:

“The economic landscape remains tense. Interest rates were holding steady at 4.25%, down slightly from April, but still elevated enough to dent confidence. 

“Inflation continued to drop, but that hasn’t been enough to offset sluggish growth or ease concerns in the commercial property market. What’s more, speculation that the Chancellor may raise taxes this autumn is adding another layer of uncertainty for investors and business owners alike. 

“Our team is seeing the effects of this firsthand. Downward revaluations are increasingly common, particularly for offices and secondary retail, where elevated borrowing costs mean the prices paid in 2022 simply can’t be justified. Assets such as these are struggling to sell unless heavily discounted and lenders are becoming more risk-averse. 

“That said, it’s not all negative. Construction output continues to show modest growth, rising 0.9% in April following a 0.5% uplift in March. While the sector has faced significant disruption due to labour shortages and material costs, this return to growth signals some renewed optimism for long-term investment, particularly in development and repurposing opportunities. 

“Sustainability targets for commercial property are fast approaching. The minimum EPC requirement is currently an E, but this will change to a C by 2027 and a B by 2030. Yet around 80% of UK commercial buildings are predicted to fall short of the 2030 benchmark. For landlords and occupiers, non-compliance could mean fines of up to £150,000 per letting and/or will have a negative impact on the value of an asset if it is deemed unlettable by the new rules. Without proper support, these deadlines are likely to slip, just as we predict in the residential sector. Right now, the regulations feel unanchored, lacking both structure and meaningful government backing. 

“Overall, much like our previous reports this year, the market is still recalibrating. Some say the divide between winning and losing assets is becoming clearer, however on the ground and with the right expert support there are still opportunities to grab hold of. While investor sentiment is cautious, the appetite for the right assets is still there. 

“At Landwood, we’re helping clients navigate these shifts, bridging the gap between buyers and sellers in a changing market. Whether it’s repositioning underperforming assets, managing distressed sales or navigating new sustainability standards, we’re here to deliver expert, partner-led support where it matters most.”

KEY SECTOR REPORTS

Industrial and Logistics 

Global warehousing costs rose 3.6% over the past year, marking the third consecutive year of slowing growth as markets adjust to macroeconomic uncertainty and rising power, construction and rental costs. With construction and fit-out costs still remaining high, many occupiers feel best placed to stay put and hold out until the market recalibrates. 

Many SMEs we work with see lease re-gears as the best next step to secure favourable terms while the market settles. However, as occupiers reassess their options, balancing transport and labour access with increasing power needs and facilities, this is delaying leasing decisions. 

Shipping disruptions and tariffs are also pushing firms toward nearshore logistics hubs to reduce costs where possible. 

Land

Land continues to see positive demand, particularly for residential-led development opportunities. Local authorities, including Manchester City Council, are prioritising the release of brownfield sites to meet ambitious housing targets, which is helping drive momentum across Greater Manchester and beyond. Demand from registered housing providers remains high, particularly in suburban and edge-of-centre locations. 

We are currently dealing with the sale of several plots of land primarily in the North West including car parks and plots with development potential. These niche opportunities continue to attract interest, particularly where there’s scope for redevelopment into housing or mixed-use schemes. However, the rise of build costs over recent years is having an effect on residual values. 

With appetite looking positive, vendors holding underutilised land should consider bringing it to market while planning policy remains supportive. Obtaining planning advice in advance will help drive buyer interest and maximise value.

Retail and Leisure

The retail sector continues to face challenges with cost-of-living pressures still impacting consumer spending. High streets particularly feel the strain, while some shopping centres showed positive leasing activity in Q1, driven by major brands and new entrants, overall footfall remains lower than average. 

For vacant secondary retail properties, the market is currently declining and it may be a time to consider disposal before values decline further. For tenanted assets, regearing leases before sale can provide buyers with greater security of tenure, which will enhance the sales prospects of an asset. Where tenants are underperforming its worth considering grounds to serve notice and either selling with vacant possession, or sourcing a new tenant prior to disposal. 

High inflation, rising business rates and squeezed margins are creating challenges for both tenants and landlords, often resulting in prolonged vacancies and making sales more difficult. 

Retail parks remain a standout performer, with low vacancy rates around 6.2% and rising rents fueled by strong tenant demand and a shortage of new stock. This segment continues to outperform traditional high streets, as shoppers favour convenience and easy access. 

Care and Independent School Sectors

Alternative sectors continue to outperform traditional assets, with investors increasingly targeting opportunities in care, healthcare, independent schools and data centres.

The care sector in particular is showing strong signs of recovery, driven by robust tenant demand, rising care fees and improving operator performance. Investor appetite has more than doubled in the past year, with 35% now actively pursuing
care home assets as confidence returns and financing pressures ease.

Although sectors like independent schools still face challenges, particularly in light of recent VAT and operational cost hikes, the wider picture across alternative sectors remains resilient and offers opportunities for long-term growth.

We’re seeing first-hand how these shifts are influencing decision-making, with our restructuring and recovery specialists supporting clients in reassessing their portfolios.

Distressed Assets

Distressed asset sales are expected to rise as refinancing pressures continue to bite. Although inflation is easing and interest rates may begin to soften, they remain well above historic norms, making refinancing difficult for many. Many landlords are feeling the squeeze, particularly where rental income isn’t keeping pace with rising costs. As a result, more properties are slipping into distressed territory and coming to the market.

We’re seeing growing interest from buyers with access to capital who are looking to capitalise on these distressed assets and reposition them for long-term growth.

Auctions

James Ashworth, partner and head of Landwood Property Auction and Agency team, shares key auction market trends and insights. 

The UK property auction market continues to demonstrate resilience, with mixed performance across residential and commercial sectors during the summer. According to the latest data from the Essential Information Group (EIG), results for May, June and July highlight a steady demand for well-priced assets despite ongoing caution among investors. 

In May, overall lots sold dipped by 2.1% compared to last year, though total receipts rose by 4.3% to £543.6 million, reflecting stronger pricing in certain residential segments. 

June saw a sharper slowdown, with lots offered down 6.7% year-on-year and total revenue falling 5.8% to £612.9 million, driven largely by weaker appetite in commercial auctions. 

By July, activity had rebounded, with lots sold up 3.5% and total funds raised increasing by 7.1% to £698.2 million – underlining renewed investor appetite for high-yield, development-ready stock. 

James comments: 

“Across May to July, we’ve seen fluctuations that reflect the wider economic picture. The slowdown in June was expected as investors paused to take stock of interest rates and inflationary pressures. The July rebound, with receipts up more than 7%, is encouraging – but it doesn’t tell the full story. The market is still feeling the weight of higher interest rates, inflation and sluggish UK growth. What it does show, however, is the continued strength of demand for well-priced residential and mixed-use opportunities. 

“Commercial remains more challenging, with investor caution evident in June’s dip in receipts. That said, where assets offer clear income potential or redevelopment value, appetite is still there, especially outside of London where yields remain attractive. 

“Looking ahead, I expect residential demand to remain steady, with development-ready and mixed-use assets continuing to attract strong bidding. Commercial will likely remain under pressure, but sellers with realistic pricing and clear marketing strategies can still achieve excellent results.” 

“As ever, success in this climate comes down to understanding buyer demand and working with agents who can deliver sharp, targeted campaigns and trusted regional insight.”

You can see all of the available commercial property listed by Landwood Group on NovaLoca here.

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