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The Royal Institution of Chartered Surveyors (RICS) UK Commercial Property Monitor for Q2 2025 shows a broadly stagnant commercial property market, although Central London continues to exhibit a relatively stronger momentum.
Overall occupier demand nudged down a touch this quarter, with office and industrial property reporting a +2% and +4% (net balance), respectively. Whilst these figures remain in the positive, a result below +5% or above -5% indicates a flat picture. Retail property continues to exhibit weaker conditions than residential and industrial, with the sector returning a -13% result this quarter, which is the same figure reported in Q1.
Despite the muted conditions, most respondents believe rental prices will move upwards across the office and industrial sectors over the year ahead. Growth is however concentrated among prime property, further demonstrating the growing gap between prime and secondary markets.
Central London displays an altogether stronger outlook for the office sector and, to a lesser extent, retail. Respondents in the capital’s core report firmer momentum behind occupier demand compared to the national data. This is expected to translate into greater rental price growth in the near term and over the year ahead.
Vacant space increased across sectors, prompting landlords to increase the value of incentive packages being offered to tenants. Investment enquiries stood at a perfectly flat 0% figure and unsurprisingly, respondents are split on where they think the market is heading. Thirty-five per cent think the market is in an upturn phase, whilst the same proportion think it is moving downwards.
Tarrant Parsons, RICS Head of Market Research & Analysis, said: “The latest UK Commercial Property Monitor results remain consistent with a largely stagnant market at the national level. Both occupier demand and investment enquiries are still broadly flat, while landlords continue to offer significant incentives to attract tenants amidst rising vacant space. That said, prime assets and alternative sectors are poised for modest capital value and rental growth over the year ahead, with a slightly more favourable credit environment lending some support to the outlook.”
