Landlord money moving 'out of homes and into offices'

Some residential landlords quitting the PRS appear to have moved their investments into the commercial sector, particularly offices.

Shawbrook reports that applications for office-related projects have risen sharply – by 44% - in the first half of the year. Demand for office space from landlords in some regions has more than doubled, with the South West seeing a 233% increase in applications, closely followed by the West Midlands (225%).

Applications in London and Wales have also shot up by 100% in the first half of 2025, while applications in Yorkshire and the Humber have risen by 83%, followed by the South East (50%). However, this growth hasn’t translated across all regions, with East Anglia dropping by 60%, the East Midlands (-20%) and Scotland (-14%).

Daryl Norkett (main image), director of real estate proposition at Shawbrook, says diversification has been the theme of the past couple of years for professional landlords - i.e. those with larger portfolios - who continue to demonstrate agility and adaptability in the face of ongoing market and economic challenges.

Covid

“With Covid firmly in the rear-view mirror, businesses are adjusting to the new normal, which for many includes a return to office working - as evidenced by a 100% increase in applications for London office projects,” adds Norkett.

“As economic turbulence looks set to be on the cards for the foreseeable future, professional landlords should be looking to take advantage of increasing demand across different asset classes to maximise their yield and protect their business.”

Savills’ UK Office Market Round Up confirms that regional office take-up in the first quarter of 2025 totalled 991,690sq ft as part of 193 transactions, 10% higher than the five-year Q1 average. Take-up was 9% higher than Q1 2024 and 6% higher than the five-year Q1 average.

Savills expects a 6% increase in office-based employment in the UK during the next five years.