Retail and office space property investment is bouncing back, with UK landlords and commercial buyers pivoting towards high-street units and city-centre offices as interest rate cuts ease financing pressures. Rightmove reports a 35% annual rise in agent enquiries for retail units—the sharpest rebound since 2021 and a clear signal of shifting investor sentiment.
Landlords shift strategy as retail demand returns
While industrial property has led the commercial investment market for years, retail is making a striking comeback, particularly for landlords and portfolio investors seeking diversity. According to Rightmove, interest in high-street retail units jumped 56% year-on-year, with total commercial property investment demand up 20% on Q2 2024.
This uptick follows two cuts to the Bank Rate this year, with the most recent in May boosting investor confidence. For landlords, lower borrowing costs are opening the door once again to retail sectors that had been dismissed as risky post-2020.
Andy Miles, managing director of commercial real estate at Rightmove, noted: “Rate cuts are helping investment into commercial property… retail and office spaces are becoming more attractive to invest in.”
It’s not just speculation either. Rightmove’s figures show a 4% drop in available retail properties year-on-year, intensifying competition and putting upward pressure on prices—good news for landlords already holding commercial stock.
Sffice space sees sharp rise in interest across the UK
Alongside retail, the UK office sector is rebounding strongly, with investor interest up 65% compared to last year, according to Rightmove’s data. Leasing demand for office space is also up 12% nationally, with London seeing 14% growth.
Certain hotspots are experiencing even more dramatic recoveries—Westminster saw a 29% spike in demand, and the City of London rose by 21%. Hybrid working may be here to stay, but the pendulum appears to be swinging back towards dedicated workspaces.
Michael Sears, a commercial advisory panel member at NAEA Propertymark, said: “These figures are the highest since 2021 and show that many employers are finding a new balance for their office space needs—blending hybrid flexibility with physical infrastructure.”
Landlords looking to diversify beyond residential may now find office leases more appealing, especially in core city locations where demand is rebounding but stock remains tight.
Industrial units still dominate, but retail resilience returns
The industrial sector remains the powerhouse of commercial investment, with demand more than doubling (up 105%) and leasing interest rising 41% year-on-year. However, this growth is no longer eclipsing the retail and office bounce-back. Landlords now face a broader range of viable commercial strategies.
Businesses themselves are showing fresh confidence in bricks-and-mortar retail, with a 10% rise in demand to lease shopfront units, despite the ongoing growth of e-commerce.
Sears added: “It’s a positive sign of high street resurgence in many regions. Investors are starting to see value in high-quality retail and office space, even after years of changing habits and online disruption.”
For landlords seeking alternatives to increasingly squeezed residential margins—where policy and regulation are becoming more complex—commercial property may be back on the table, particularly in areas seeing long-overdue regeneration or tenant resurgence.
