Article By Aman Parmar, Head of Marketing UK at BizSpace

What SME demand for workspace is telling us heading into autumn

Small and medium-sized businesses account for 99.85% of the UK’s 5.69 million private sector businesses (Department for Business and Trade, October 2025). At BizSpace we provide offices, studio space and industrial units to exactly these businesses, across more than 70 business centres in England. That gives us a particular vantage point on the commercial property market: the everyday workspace decisions of smaller occupiers, seen close up.

Rightmove’s Q1 2026 Commercial Insights Tracker showed industrial as the only sector with year-on-year demand growth, up 6% for leasing and 13% for investment. What we can add from the operator’s side is a view of the deals themselves: how smaller businesses are turning interest into workspace as 2026 moves into its final stretch, and why so much of that activity happens in a corner of the market that completed-deal leasing statistics were never designed to count.

Smaller occupiers have not left the office market. They are just harder to see in the statistics.

Most published office figures measure conventional leasing, and conventional leasing is increasingly dominated by the biggest and best buildings. Grade A offices, the newest and highest-specification stock, took a record 74% of Central London office leasing in 2025, rising to 85% in the first quarter of 2026 (Cushman & Wakefield). Read one way, that says the market has gone premium. Read another, it raises an obvious question: where did everyone else go?

Our reading is that they are transacting differently, and the numbers back it up. By the end of the first half of 2025, 72% of lettings below 5,000 sq ft in the conventional central London office market completed on a fitted basis (Savills), and occupancy across London’s flexible workspaces had risen to 86%, up from 82% a year earlier (Workthere). In the managed office market, the five to ten desk segment, classic small business territory, recorded 22% year-on-year rate growth at the end of 2025 (Rubberdesk). Cushman & Wakefield make the same point in their Q1 commentary: smaller businesses “tend to lease smaller units or flex space” but “remain active in the market”. Licences and managed agreements are not leases, so this activity never appears in conventional leasing figures. That is not a flaw in anyone’s research; it is simply a boundary of what those figures measure. But it does mean the smaller end of the market is easy to underestimate.

The same shift is happening regionally, which matters more to us than the London story. Regional markets now account for 66% of UK flexible workspace demand, up from 54% in 2020 (The Instant Group, October 2025). That matches the pattern of interest across our office space network, where demand is strongest for smaller suites taken on simple, flexible terms.

Small industrial units: the tightest market almost nobody reports

Most reporting on the industrial market focuses on large distribution warehouses, where the squeeze is well documented: speculative development of warehouses over 100,000 sq ft, meaning space built without a tenant already signed up, is now 63% below its 2022 peak (Savills, July 2026).

The squeeze is at least as sharp further down the size bands, on the multi-let estates where most SMEs operate. Across units of 500 to 50,000 sq ft, Newmark describes UK multi-let supply as “extremely limited”, with the space under construction nationally equating to just over one month of national take-up (Newmark, November 2025). One month. The best small and mid-sized units now command an average rent of £15.55 per sq ft, up 4.0% year on year and roughly 31% more than large warehouse space (Colliers, June 2025).

Demand for these units has structural support. Online sales held at 27.5% of British retail in 2025, up from 19.2% in 2019 (ONS), sustaining a generation of small fulfilment and production businesses that need physical premises to grow. Our industrial units and workshops sit exactly in this segment. They are consistently among the first spaces to let when they come back to the market.

Defence spending is heading for the regions, and much of it will need small premises

The Defence Investment Plan, announced on 30 June, is backed by £298 billion of investment across the next four years, with annual defence funding rising from £54 billion to almost £80 billion a year by 2029 (gov.uk). Two details matter for commercial property outside London. First, 68% of defence spending with UK businesses already goes outside London and the South East (gov.uk). Second, the MOD has pledged to increase its spend with small and medium-sized firms by 50% by 2028, an additional £2.5 billion taking total MOD spending with SMEs to £7.5 billion, across roughly 12,000 companies, supported by the new Defence Office for Small Business Growth (gov.uk, January 2026).

The property implications are starting to be quantified. BNP Paribas Asset Management estimates that defence growth at current spending plans could create around 30 million sq ft of UK real estate demand, including roughly 18 million sq ft from manufacturing and 14 million sq ft from logistics (Bisnow, July 2026). Savills’ latest industrial research notes defence-related occupiers already taking space, including the MOD’s first major acquisition at Panattoni Park Swindon (July 2026). The large deals will make the headlines. But every prime contractor sits on top of a supply chain of smaller engineering, components and R&D firms, and those firms will need workshops and light industrial units close to the clusters where the money lands.

What we are seeing on the ground

September is traditionally when commercial property decisions restart: teams are back at full strength, plans that sat over the summer get actioned, and businesses that have outgrown their premises start looking in earnest. We are seeing that seasonal pick-up come through in enquiries and viewings across our centres, and the mix of businesses coming through the door continues to broaden. Alongside our core of local trades, makers and service businesses, we are seeing more interest from small manufacturing and engineering firms, and from online sellers taking their first physical unit.

As for the rest of the year, we are realistic about the wider economy but confident in our segment of it. Businesses keep starting, and the ones that start need somewhere practical and flexible to work from. We expect demand for smaller offices, studios and industrial units to stay firm through the autumn and into the new year.

The rest of 2026: busy where it matters most

The formation statistics tell the most important story: 815,277 new companies were incorporated in the year to March 2026 (Companies House), and the UK recorded 317,440 business births in 2024 (ONS). Sentiment is more cautious, with the British Chambers of Commerce reporting in July that only 17% of firms plan to increase investment in plant and equipment. In other words, businesses are starting in large numbers, and choosing carefully how they commit.

Together those two facts describe the market we serve. Businesses keep starting and keep needing premises, but they want to stay light on their feet while conditions settle. That is precisely the gap flexible workspace exists to fill. Whether it is a first office, a studio, or a workshop for a growing manufacturer, we expect the businesses that make up most of this market to keep choosing workspace they can commit to without betting the company on a ten-year lease.

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

BizSpace is a leading provider of flexible workspaces and industrial spaces for SMEs, operating business centres across England.

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