2025 was challenging for both occupiers and landlords as economic uncertainty and in particular additional costs such as National insurance and business rates held back many occupier decisions. However, the last two months have seen more optimism in the market, according to SHW’s Q1 2026 Industrial & Logistics Focus.

Tim Hardwicke, SHW’s Partner and Head of Agency, comments: “Property relocation or expansion decisions continue to take an age, often 12 months or more from concept/first viewing to reality. Rents have remained broadly level across the South East, although in some cases have reduced, due to occupier push back on higher costs.

“Green buildings with lower running costs remain attractive for occupiers, however the main concern has now switched to affordability, especially for small to medium sized companies.”

Overall, there has been an uptick in availability across most areas – mostly second-hand stock returning to the market rather than newbuild – providing more options for occupiers to consider. Tim adds: “As we move more to an occupier’s market there has been rental pressure and we have seen more incentives / longer rent free’s given as landlords focus on landing the active occupiers in the market.”

In Croydon and the surrounding areas, rents remained level to the previous year in 2025 at £22 per sq ft. Take up across 2025 was almost half that of the year before at 196,500 sq ft transacted. CR1 & CR2 are catering for demand for high-quality new space (52,000 to 110,000 sq ft), along with Prologis Park Beddington, with four units available from 15,000 to 45,000 sq ft. However, there is currently an oversupply of stock which is supressing rents and will do until the overhang of stock is corrected.

In Sutton, Chessington Epsom & Leatherhead, rental levels dropped slightly to £24 per sq ft, however, this area bucked the trend with take up almost doubling to 117,000 sq ft, due in part to the sale by SHW, of Jubilee House, a 33,000 sqft second hand building. Demand remains steady, with schemes such as The Base, Chessington providing new and pre let opportunities for high-quality space.

In Redhill and the surrounding areas, vacancy is low at 3%. Take up almost matched levels year on year, with rents staying at £18 per sq ft. Availability is limited going into 2026 with 4 of the 5 units let or under offer at Saltwhistle Business Park, Redhill and just one unit remaining of 12,692 sq ft at IO Centre in Salfords.

In Crawley & Gatwick rents also remained unchanged in 2025 at £21.50 per sq ft. Take up was half that of the previous year, with a total of 156,700 sq ft transaction across 2025. New space to cater for the high demand includes 33,000 sq ft at Gatwick 33, which is coming soon. But new space is being snapped up quickly with seven units already let at Mid Point 23, Pease Pottage and one under offer, leaving no availability at this 76,000 sq ft scheme.

Although rents remained level in Horsham at £16 per sq ft, the area saw a bumper year of lettings totalling 65,000 sq ft in 2025, compared with none over 5,000 sq ft in 2024. As such, new space has now come forward including up to 58,944 sq ft at Charwood House and various units from 7,510 sq ft at Lawson Hunt Industrial Park, now available to let.

Bucking the trend in rental levels, Shoreham & Lancing saw a slight uptick in 2025 to £25.50 per sq ft, with take up trebling year on year.

Brighton & Hove had a very disappointing level of take up in 2025 at only 6,000 sq ft (compared with 675,000 sq ft in 2024). Vacancy remains low at 3% however, the low take up is not surprising considering the ongoing lack of industrial space in the area, with planning decisions favouring residential use. Demand remains high. With all available space already snapped up at Billingshurst Enterprise Park. Panattoni Park Brighton is going some way to cater for demand, bringing forward a total of 267,074 sq ft this year.

SHW’s Q1 2026 Industrial & Logistics Focus also covers: Elmbridge, Kingston & Richmond; Haywards Heath & Burgess Hill; Bognor & Chichester; Rustingon & Littlehampton; Worthing; Shoreham & Lancing; Lewes, Newhaven & Peacehaven; Eastbourne, Hailsham & Polegate and Hasting, St Leonards & Bexhill. The report also covers new changes in ratable values for each region.

Increase in leasing activity predicted for the South East Office market in 2026.

SHW’s Q1 2026 South East Office Focus predicts a more positive 2026, with several buildings under offer as we start the new year.

Tim Hardwicke, SHW’s Partner and Head of Agency, comments: “2025 take up across the South East office market was relatively slow in most centres with very few transactions happening over 5,000 sq ft, the minimum size in which we start to capture our data, although the sub 5,000 sq ft market has been quite active in most centres.

“As in recent years, the majority of take up is linked to a ‘flight to quality’ move. Economic uncertainty has held back a number of occupier moves which has resulted in low levels of take up. However, as we enter the new year there are a number of buildings under offer/transactions agreed, and so as we run into 2026, we are more positive and expect more letting activity.”

As business and employment costs increase, occupiers are looking hard at property costs, how much space is needed and larger incentives are often needed to reach quoting rents. As a result, buildings offering great space, with amenity, at competitive rents and/or larger incentives are likely to see higher letting activity. Successful lettings in key towns are encouraging investors to spend on refurbishment and repositioning, however debt funding for this is hard to secure.

In Croydon, top rents are up marginally up to £36.50 per sq ft, from £36 per sq ft over the last three years, with take up also slightly higher year-on-year at 84,500 sq ft transacted over the 5,000 sq ft level measured in this report. These include seven lettings at Corinthian House, and 13,000 acquired by SHW on behalf of Southern Housing at Mosaic East. Logged demand increased significantly in the last quarter of 2025 which bodes well for the year ahead. With approximately 1.25 million sq ft of office space being lost to permitted development rights, Croydon will likely see an uplift in rents across office space in the next couple of years.

In Epsom and Leatherhead, rents dropped to £27 per sq ft in 2025 (from £29.50 per sq ft in 2024) and take up was significantly down year-on-year with 32,000 sq ft leased. However, demand continues to be high for the right space.

Similarly in Redhill & Reigate rents have dropped to £27.50 per sq ft (from £29.50 in 2024). However, take up increased with 55,000 sq ft transacted in total across 2025 (up from 42,500 sq ft). Demand remains healthy with refurbished high spec offices such as Bridge Gate, Redhill (39,000 sq ft) now ready to cater for this.

In Crawley & Gatwick top rents are at £38 per sq ft, level year-on-year. Take up increased significantly in the second half of 2025 to a total on 32,500 sq ft let (just 6,250 sq ft in H1). Logged demand dropped in the last quarter but remains positive for letting new available buildings such as the 42,000 sq ft The Create Building and the 16,122 sq ft Origin Two.

In Brighton & Hove, take up was down slightly year-on-year to 84,500 sq ft let in 2025. Rents remain level at £44 per sq ft and demand remains relatively high. A mixture of newly built office space, such as 10 Middle Street, and extensively refurbished offices – including Imperial House and Napier House – are now available to cater for demand.

SHW’s Q1 2026 Interactive South East Office Focus covers further regions including Central London; Kingston, Richmond, Putney & Wimbledon; Bromley; Burgess Hill & Haywards Heath; Horsham; Littlehampton, Bognor & Chichester Eastbourne, Hailsham & Polegate and Worthing & Lancing.

Footfall is stabilising on High Streets across the South East.

The UK High Street in 2026 will continue to be fragile, with vacancy rates remaining elevated, reflecting both structural change and cautious consumer confidence, according to SHW’s Q1 2026 Retail Focus. However, footfall is stabilising and national vacancy is expected to return toward pre‑COVID levels of around 12.4% as the occupational market strengthens.

Richard Pyne, Partner and Head of Retail Agency at SHW, says: “We are seeing a cautious recovery across the South East retail market. Footfall improved modestly in the lead‑up to Christmas helping uplift local sales, though overall volumes remained below pre‑pandemic levels due to sustained cost‑of‑living pressures and weakened consumer confidence. High operating costs, particularly business rates, continue to weigh heavily on retailers despite temporary relief measures.

“High Streets are shifting into mixed‑use ecosystems, combining retail with hospitality, leisure, services, and workspace. Successful towns increasingly favour curated, independent‑led environments that prioritise safety, public realm improvements, and practical support for traders. Local authorities’ approaches to business rates and parking remain pivotal.”

Regional performance varies across the South East: locations benefiting from strong transport and employment hubs—such as Brighton, Kingston and Guildford are seeing robust footfall and renewed retailer interest.

In Brighton, the high street remains a lively mix of independent boutiques, national chains, and creative pop‑ups, shaped by the city’s strong arts culture and steady flow of tourists and students. Western Road, North Street, and the Lanes remain the core retail areas. The purchase by Ikea of Churchill Square Shopping Centre, and their opening in the former Debenhams, has brought much needed footfall to the city.

Kingston upon Thames continues to strengthen its position as one of Greater London’s most resilient and attractive retail centres, supported by strong consumer demand and ongoing investment. New openings here include: Co Op ‘On the Go, Dunelm, Costwold & Urban Fun.

Guildford’s high street market has seen a wave of renewed activity, with several notable store and dining openings strengthening the town’s appeal. Mango is set to more than double its footprint at The Friary Centre by relocating to a 7,000 sq ft unit opening in spring 2026, marking a significant investment in Guildford’s town‑centre retail mix. On the hospitality front, Guildford High Street has welcomed Pasta Evangelists, opening its first restaurant outside London and introducing a pasta academy.

Elsewhere, in Crawley the retail landscape continues to evolve, supported by major regeneration projects and a wave of new food‑and‑beverage arrivals that are boosting footfall and refreshing the town’s offer. Recent activity includes Popeyes opening its first West Sussex restaurant at Crawley Leisure Park in November 2025, bringing its fast‑growing Louisiana fried chicken brand to one of the town’s busiest retail destinations. Meanwhile, Taco Bell have now opened on the High Street, signalling renewed momentum for another well‑known brand in the town centre. These developments complement broader retail‑led regeneration efforts.

Croydon’s retail market is experiencing a marked revival, driven by a combination of new store openings and ongoing town‑centre regeneration. SHW lettings at 36 North End at the entrance to The Whitgift Centre and Clip N Climb in St Michaels Square are on the back of the changing face of Croydon Centre. The launch of Allders Parade is a major milestone, introducing brands such as Miniso, Sky, Abaci, Isle of Flowers, Coco & Nut, and Meltin’ Memories as part of the wider Whitgift Centre Project led by Unibail‑Rodamco‑Westfield (URW)

South East development market opens with heightened activity.

The South East development market has opened with heightened activity on the back of base rate reductions last year, according to SHW’s Q1 2026 South East Development Focus.

Peter Coldbreath, Partner at SHW, says: “Further reductions in case rate would be welcome to provide more momentum in what is a complicated, time consuming and costly market. We aren’t yet seeing evidence of larger volume sites trading more dynamically, however well-located land and refurb opportunities in good villages, towns and cities are driving new green shoots of activity.”

Ongoing planning delays, plus a raft of additional information needed to obtain a planning consent, together with debt finance costs have impacted prices being paid for sites across the South East. Despite this, activity remains positive in the both the residential and commercial development markets. Developers, however, are being more selective and focusing on prime locations, unless there is a significant upside on considering non-prime.

Peter adds: “2025 closed with buzz words such as BNG, Ground Rent Interventions, Local Government reorganisation, Gateway 2 and the UK’s Building Safety Act, along with the eradication of ‘No Fault Evictions’. Each new hurdle to overcome hinders the ability the ability to get diggers breaking ground. So, will 2026 be the year that Government action will match the rhetoric of super heating the process for development to be an engine for growth?  Will super mayoral authorities for the South East come to fruition? Simplified structures would be welcome, and care needs to be taken so that years are not lost while the new regimes bed in.”

In the London and South West M25 region, price sensitivity continues to drive the residential development market with overpriced opportunities not selling. Developers are preferring housing schemes over flats and housing associations are in need of funds to unlock sites, with G15 group of London leading housing associations reporting a 66% drop in the number of new affordable homes being built in London over the last two years.

High build costs have continued to impact activity by developers. Appetite for strategic land has increased following recent planning policy changes, especially for grey belt sites in the South East.

Across Surrey and Sussex, smaller sites are attracting developers/investors, mainly for family houses trading. Tim adds: “Viability challenges remain, especially for flatted schemes where cost side pressures remain uppermost in buyers’ minds.” Slow sales rates and extended holding costs are impacting the market further. House builders are looking at strategic land opportunities in readiness for anticipated upswing in sentiment.

In the South East commercial development market, good demand continues for prime logistics sites. Tim adds: “Although prices are starting to increase from the ‘new norm / low’ price, aspirations are often higher than an appraisal will justify. Non-prime sites continue to transact, but at lower levels.

Planning risk is an issue on sites, even those with an allocation, due to the increasing planning delays, increased surveys required and red tape increasing development costs and frustrating developers, with planning taking at least 12 months and often much longer to secure.”

Sites with restricted planning use or trading hours restrictions are having to be discounted due to less occupier demand and 80% of occupier interest continues to be storage and distribution lead.

All schemes aiming for EPC A / BREEAM Very good or Excellent due to occupier wishes and ESG requirements becoming higher to meet their own targets and for contracts specifying ‘Greener’ buildings’.

You can see all the commercial property listed by SHW on NovaLoca here.

www.shw.co.uk

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