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17/12/25 3:30 pm
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That’s on the evidence produced by Rightmove’s latest Commercial Property Tracker
Despite widespread concern in the long run up to Labour’s late November Budget, the UK commercial property market has left 2025 behind with some resilience still intact.
Rightmove’s latest Commercial Property Tracker suggests that while the uncertainty slowed momentum, demand across most sectors remained positive, and it suggests the outlook for 2026 as cautiously improving.
This relative stability in the market may surprise some property investors and occupiers, given the chaos of the run-up to the Budget, the persistent cost pressures, rising operating expenses, and a major shake-up to business rates coming in April 2026.
Yet, commercial real estate, according to Rightmove and other industry commentators, appears to be entering more of a transitional phase than a market downturn, supported by moderately improving financing conditions (inflation and interest rates tracking downwards) but a continued re-weighting towards industrial and logistics assets.
The months leading up to Labour’s second Budget created something of a hiatus, a long “wait and see” period, which had a negative effect among business leaders and investors. Speculation over possible swinging tax reforms and fiscal tightening delayed the take up of leases and investment decisions, dampening quarterly growth compared with the earlier periods, themselves exhibiting anaemic growth in 2025.
However, despite all this, year-on-year demand has remained largely positive, a sign that occupiers and investors are adjusting rather than retreating. As Rightmove’s commercial director Andy Miles has noted, suppressed activity reflected timing uncertainty rather than structural weakness.
In other words, businesses were on hold for a period, but they didn’t abandon their expansion plans. This is important because in previous downturns, most notably during COVID and the Global Financial Crisis of 2008/2010, uncertainty led to a collapse in demand. So far, it would seem, that pattern has not been repeated this time.
Rightmove’s expansion into commercial property might be of interest. It is part of a broader attempt to diversify its business beyond its core residential dominance and defend its long-term growth trajectory.
While the company remains the clear leader in UK residential property portals, its move into commercial real estate reflects both an opportunity and a necessity. It sees opportunity in a fragmented market, and a necessity to maintain its UK lead position as competitive pressures intensify.
Commercial property offers Rightmove strategic advantages. It expands the addressable market, opens higher-value advertiser relationships, and creates cross-selling potential with agents operating across the residential and commercial sectors. It also allows Rightmove to leverage its network effects, vast data, traffic scale, and platform infrastructure. These are historically the foundations of its exceptionally high profit margins.
The $28 billion US company CoStar's acquisition of Zoopla represents one of the most credible long-term threats Rightmove has faced in its 26-year existence. CoStar brings deep capital resources, a proven track record in commercial real estate data, and a clear ambition to challenge UK incumbents with a more aggressive pricing strategy, richer analytics, and better-integrated technology.
Unlike earlier challengers, CoStar is not simply competing on listings or consumer traffic — it positions itself as a data-driven property intelligence platform, blending residential search, commercial analytics, valuation tools, and investor insights.
That matters because Rightmove’s moat has historically rested on network effects and traffic dominance, not necessarily technological superiority. If CoStar successfully improves Zoopla’s product quality, data depth, and agent value proposition — while subsidising growth — it could gradually erode Rightmove’s pricing power and market leverage.
Adding to investor nerves, which has recently hit Rightmove’s share price hard, there’s speculation about the effect of artificial intelligence creating a low entry price competition, and the extra investment the company needs to invest in AI itself. The company has announced plans to spend around £60 million over three years on AI-driven upgrades to its platform, tools, and internal systems, with management acknowledging this will slow short-term profit growth.
Rightmove’s analysis shows that industrial property leads the market, reinforcing its status as the backbone of modern commercial property portfolios. In this sector, leasing demand is up 11 per cent year-on-year and agents are finding investment demand is up 12 per cent
This demand reflects the ongoing structural changes affecting the sector: e-commerce logistics, last-mile delivery, international supply chain reshoring, and continued growth in urban warehousing.
Compared with offices and retail, industrial space has the benefit of simpler operating models, stronger tenant demand, and clearer income dependability. Investors increasingly view industrial property as a “core defensive asset class” and this is helped by the stabilisation of interest rates.
Office lettings recorded modest national growth of around 2 per cent, but performance varied sharply depending on location. Demand in central London had slowed as the City of London returned figures at negative 24 per cent year-on-year, with Westminster at negative 8 per cent.
This likely reflects a combination of caution in the run up to last year’s budget, ongoing hybrid-working (work from home) adjustments, tight supply of prime offices limiting available stock and tenants prioritising high-quality, energy-efficient buildings.
The data suggests not the death of the office market but a split between prime energy efficient offices and secondary offices which continue to struggle with obsolescence, retrofitting costs, and energy regulation compliance. For these landlords, it underscores the hard truth that capital expenditure on refurbishment is a necessity if their properties are to remain attractive.
Retail leasing demand was down by 4 per cent, continuing a long-running trend of the rationalisation between bricks-and-mortar retail and online. While retail investment demand was up slightly at plus 3 per cent, this is likely a reflection of value-driven buyers targeting value priced assets rather than a broad sector recovery.
Leisure saw declining investment demand at negative 7 per cent, highlighting the pressures these businesses face from rising staffing costs, food inflation, energy bills and business rates, even when consumer spending is showing a tentative recovery.
These figures reinforce the idea that retail and leisure are no longer the growth sectors they once were, but opportunities still exist for niche value-driven plays, always dependent on property condition and location quality.
The Budget’s most significant long-term impact on commercial property may come from business rates reform, due to take effect in April 2026. The new five-category multiplier structure introduces a clearer distinction between retail, hospitality and leisure vs other commercial property.
There is a new high-value premises band and a rebalancing of the tax burden across sectors. This is intended to modernise and rebalance the system, but the reforms could also increase operating costs for some landlords and tenants. It will alter location economics for retailers and hospitality operators and influence long-term capital values depending on rating liabilities.
For property investors, business rates could now represent a material risk comparable to EPC regulation, financing costs, and tenant covenant strength.
One key positive in Rightmove’s report is improving market sentiment led by anticipated interest rate cuts later in 2026. Lower borrowing costs would improve debt service coverage, increase the amount of transactions, support capital values and attract private equity and institutional capital back into the market.
Darren Bond, Global Managing Director at Christie & Co, says:
“We are optimistic about the market outlook for our specialist sectors. The visibility and pipeline of transactions anticipated to happen in the first half of the year are encouraging when compared with the same period a year ago.
“There is no doubt that cost pressures will continue to put a strain on businesses, and the economic environment will be more challenging in the year ahead.
“As long as demand remains at the current level, with bank funding readily available, then we see no reason why market sentiment shouldn’t be maintained and even surpass the levels seen in 2025.”
The UK commercial property market it would seem is no longer in crisis mode, but also has not returned to its pre-pandemic norms. Instead, 2026 looks set to bring moderate growth rather than rapid expansion, more sector divergence, higher capital expenditure requirements and a focus on tenant quality.
Andy Miles, managing director, commercial, at Rightmove, says:
“It seems that uncertainty in the run up to the Budget suppressed demand in some areas, but it’s positive that it mostly continued to grow year-on-year.
“Some business leaders understandably delay their decision making when potentially large financial changes are just around the corner.
“There are positive signs ahead for the rest of 2026. Not only is demand largely higher than last year, but we are expecting to see further interest rate cuts starting later this year, which would help to make commercial property investment more attractive and viable to some investors.
“It’s still a difficult cost climate for many businesses, but stable demand to lease commercial space and interest rate reductions for investors would help to create some momentum for the 2026 market.
The Autumn Budget did not derail commercial property, but it also did not remove the sector’s structural challenges either.
Industrial property remains the standout UK performer. Offices are stabilising but they are splitting into winners and losers, prime and secondary. Retail and leisure continue to face long-term restructuring. Meanwhile, business rates reform and energy compliance requirements are reshaping investment decisions.
As ever, for landlords and investors willing to adapt, niche opportunities exist, but tenant demand, as always, is key. Location, upgrading costs, managing tenants professionally, and cautious borrowing are vital ingredients for success 2026.
[Main image source: Rightmove / Google Analytics]
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