Q2 2026 | Published by RES Property Surveyors Limited
The UK commercial property market continues to evolve at pace in 2026, shaped by polarised occupier demand, shifting yield profiles and the enduring importance of asset quality. Whether you are a landlord, investor, occupier or lender seeking a commercial property valuation, understanding current rental levels and investment yields across the office, industrial and retail sectors is essential to informed decision-making.
At RES Property Surveyors Limited, our team of RICS Registered Valuers and chartered surveyors provides Red Book-compliant commercial property valuations across London and the South East. In this market update, we set out the latest rent and yield data by sector, examine the key drivers, and explain what these trends mean for property owners and investors seeking professional advice.
Why Commercial Property Valuation Matters More Than Ever
In a market defined by divergence — between prime and secondary assets, between sectors in structural growth and those facing structural headwinds — accurate commercial property valuation has never been more consequential. Mispriced assets lead to over-exposure on lending books, poorly structured rent reviews, and suboptimal investment decisions.
RICS Red Book valuations, carried out by qualified RICS Registered Valuers, provide the gold standard of valuation evidence. At RES, our surveyors are regulated by the RICS and hold full professional indemnity insurance. We advise clients on commercial property valuation in London and across the wider UK market, covering offices, industrial and logistics premises, and retail assets for purposes including:
- Secured lending and refinancing
- Acquisition and disposal due diligence
- Rent review and lease renewal
- Expert witness and litigation support
- Probate, matrimonial and tax purposes
- Portfolio review and strategic asset management
Office Sector: Flight to Quality Drives Record Rents
The London office market has carried exceptional momentum into 2026. Central London leasing activity in Q1 2026 reached 2.2 million sq ft across 152 transactions — up 6% on the same quarter in 2025 and 1% ahead of the ten-year average. Active demand hit a record 14.6 million sq ft, with 47% of occupiers looking to expand their footprint and only 15% seeking to downsize.
The dominant story is the flight to quality. Grade A space accounted for 92% of all Central London leasing activity in Q1 2026, and buildings rated BREEAM Excellent or Outstanding made up 53% of total take-up. This polarisation between best-in-class and secondary stock has widened rental differentials to historically significant levels.
London Office Rents & Yields – Q1/Q2 2026
| Location / Grade | Prime / Grade A Rent | Secondary / Grade B Rent | Prime Yield |
| West End (Mayfair / St James’s) | £165 – £260 psf | £51 – £55 psf | 3.75% |
| City Core | £100 – £161 psf (avg £130.80) | £37 psf | 5.50% |
| Southbank | £85 – £95 psf | £45 – £55 psf | 5.25% – 5.75% |
| Midtown (Holborn / Clerkenwell) | £75 – £110 psf | £40 – £60 psf | 5.25% – 5.75% |
| South West London | £45 – £70 psf | £25 – £40 psf | 6.00% – 7.00% |
| Major Regional Cities | £35 – £55 psf | £20 – £30 psf | 6.00% – 7.50% |
| Secondary Regional / Suburban | £15 – £30 psf | £10 – £18 psf | 7.50% – 9.00%+ |
Sources: Savills Central London Office Market Watch Q4 2025 / Q1 2026; Cushman & Wakefield UK London Offices Q1 2026; SHB Rent & Rates Guide Q1 2026. Prime yield = net initial yield on best-in-class, well-let assets.
Average prime rents in the City reached a new record of £130.80 per sq ft in Q1 2026 — up 40% on the same quarter in 2025. The top transaction recorded in the West End was £201 per sq ft at 77 Grosvenor Street, W1. City prime office yields are held at 5.50%, while West End yields remain at 3.75%, a spread of 175 basis points that hints at continued investor appetite for City assets should confidence consolidate further.
For commercial property valuation London purposes, chartered surveyors must exercise particular care in distinguishing Grade A from Grade B evidence. Secondary office rents in the City averaged just £37 per sq ft in late 2025 — down 19% year-on-year — creating a sharp bifurcation that makes the uncritical use of comparable transactions hazardous.
Key Drivers in 2026
- Severe supply constraint: under 1 million sq ft of new Grade A completions scheduled for Q2 2026 in core Central London locations
- ESG imperative: sustainability credentials are now a leasing pre-requisite for major occupiers, not a bonus
- Hybrid working has right-sized rather than reduced demand — occupiers want less space, but dramatically better space
- Pre-letting activity reached a Q1 record of 738,000 sq ft, reflecting occupier urgency to commit ahead of pipeline tightening
Industrial & Logistics Sector: Sustained Growth from a Structural Base
The industrial and logistics sector remains the standout performer of the post-pandemic commercial property market, supported by structural demand from e-commerce, supply chain reshoring and last-mile logistics. RES chartered surveyors regularly advise on industrial valuations across South London, the South East and nationally, and the data continues to point to a sector with durable underlying demand.
Prime headline rents for mid-box and multi-let industrial units averaged £15.55 per sq ft nationally in June 2025, reflecting 4.0% year-on-year growth (Colliers). For larger big-box warehouses (50,000 sq ft+), national average prime rents stood at £11.90 per sq ft, a 5.2% annual increase. London and the South East remain significantly more expensive, with London prime rents for large warehouses reaching approximately £29 per sq ft.
UK Industrial & Logistics Rents & Yields – 2025/2026
| Location / Unit Type | Prime Rent (£ psf) | Secondary Rent (£ psf) | Prime NIY |
| London (multi-let / small unit) | £22 – £30 psf | £14 – £18 psf | 4.50% – 5.25% |
| South East / M25 Corridor | £18 – £24 psf | £11 – £15 psf | 4.75% – 5.50% |
| East Midlands (logistics hub) | £10 – £14 psf | £7 – £9 psf | 5.00% – 5.75% |
| West Midlands | £11 – £15 psf | £7 – £9 psf | 5.25% – 6.00% |
| North West (Manchester / Liverpool) | £9 – £13 psf | £6 – £8 psf | 5.50% – 6.25% |
| Yorkshire / North East | £7 – £10 psf | £5 – £7 psf | 6.00% – 7.00% |
| Scotland (Glasgow / Edinburgh) | £9 – £12 psf | £6 – £8 psf | 5.75% – 6.50% |
Sources: Colliers UK Industrial Rents Map H1 2025; Cushman & Wakefield Industrial & Logistics Marketbeat Q3 2025; MSCI Monthly Index / RICS Commercial Property Monitor Q4 2025. NIY = Net Initial Yield.
Annual industrial capital value growth stood at 2.7% in the year to February 2026, comfortably outperforming the all-property average. The sector posted the highest monthly total return of all sectors in March 2026 at 0.6%, with quarterly total returns reaching 1.6%.
Secondary industrial stock in urban South East locations continues to attract strong occupier demand where supply is constrained — particularly for units in the 1,000–10,000 sq ft range where new development has remained limited. RICS Registered Valuers advising on industrial assets must account carefully for the growing rental premium commanded by EPC A or B rated buildings, as regulatory requirements tighten under the Minimum Energy Efficiency Standards regime.
Key Drivers in 2026
- E-commerce logistics demand remains structurally elevated
- Supply of new speculatively developed stock is tightening in core South East markets
- Urban last-mile requirements are generating significant rental premium in sub-5,000 sq ft stock
- Rental growth forecasts of 3.2% per annum to 2028 (IPF consensus) make industrial the strongest-performing sector for income growth
Retail Sector: A Tale of Two Markets
The retail property market in 2026 presents the starkest bifurcation of any commercial sector. Prime retail continues to demonstrate genuine resilience, while secondary high street and shopping centre assets remain under structural pressure from changing consumer behaviour, the ongoing growth of online retail and the impact of the 2025 Autumn Budget on retailer operating costs.
The Q1 2026 RICS UK Commercial Property Monitor recorded occupier demand at -19% for the retail sector — an improvement from -21% in Q4 2025, but still the weakest demand reading across all major commercial property sectors. Retail accounted for only 11% of UK investment volumes in Q1 2026, with alternatives and offices leading activity at 38% and 28% respectively.
UK Retail Rents & Yields – Q1/Q2 2026
| Asset Type / Location | Prime Rent | Secondary Rent | Prime NIY |
| Central London (Oxford St / Bond St) | £500 – £900 ZA | £100 – £300 ZA | 3.50% – 4.25% |
| Major Regional High Street | £200 – £350 ZA | £50 – £150 ZA | 5.25% – 6.00% |
| Strong Secondary Town Centre | £80 – £150 ZA | £25 – £75 ZA | 6.50% – 7.50% |
| Weak Secondary / Tertiary High St | £20 – £70 ZA | £10 – £30 ZA | 8.00% – 11.00%+ |
| Prime Retail Warehouse / Retail Park | £25 – £40 psf | £12 – £20 psf | 5.50% – 6.50% |
| Prime Shopping Centre | £100 – £250 ZA | £30 – £80 ZA | 7.00% – 8.00% |
| Supermarket / Food Store (long-income) | Rack-rented | N/A | 4.50% – 5.50% |
| Out-of-Town Leisure / F&B | £18 – £35 psf | £10 – £18 psf | 6.00% – 7.50% |
Sources: RICS UK Commercial Property Monitor Q1 2026; Carter Jonas Commercial Market Outlook Q1 2026; MSCI Monthly Index April 2026. ZA = Zone A. NIY = Net Initial Yield. Prime yields reflect best-in-class, fully let assets with institutional-grade covenants.
Annual retail rental value growth rose from 0.5% in early 2024 to a peak of 2.6% in late 2025, but momentum eased — moderating to approximately 1.7% by April 2026. Standard high street retail experienced a sharper reversal, with annual rental growth turning negative at -3.3% by February 2026, reflecting pressure on retailer margins from higher employer National Insurance contributions introduced in April 2025.
Prime shopping centres remain the only commercial sub-sector where prime yields have not recovered to pre-Global Financial Crisis levels, trading at 7.00%–8.00% — a persistent signal of investor caution toward discretionary retail destinations.
Key Drivers in 2026
- Bifurcation between prime (strong income growth) and secondary (void risk, structural demand decline) continues to intensify
- Retail total returns for Q1 2026 reached 1.7% — the highest of all sectors — driven by income return and yield stability at the prime end
- F&B, leisure and click-and-collect hybrid uses are filling former retail voids in better town centres
- Secondary high street assets in weaker catchments remain difficult to value by conventional investment methodology
All-Property Summary: Where the Market Stands
All-property equivalent yields have been broadly stable at approximately 7.0% (MSCI) over the past two years, following a sustained upward re-pricing cycle from mid-2022 to early 2024. Average all-property rental values have grown consistently at over 3% per annum since February 2022, averaging 3.5% per annum over the past three years.
UK Commercial Property: Sector Snapshot 2026
| Sector | 2026 Prime Yield | 12-Month Rental Growth | 5-Year Outlook |
| West End Offices | 3.75% – 4.50% | +4.0% | Strong; supply-constrained |
| City of London Offices | 5.25% – 5.75% | +5.5% | Strong; potential yield hardening |
| Industrial & Logistics (SE) | 4.50% – 5.50% | +3.0% – 4.0% | Structural outperformer |
| Industrial & Logistics (Nat) | 5.00% – 7.00% | +2.5% – 3.5% | Positive; moderating from peak |
| Prime Retail (London/Cities) | 3.50% – 6.00% | +1.5% – 2.5% | Stable; selective growth |
| Retail Warehousing / Parks | 5.50% – 6.50% | +1.5% – 2.5% | Resilient; operational preference |
| Secondary Retail | 8.00% – 11.00%+ | Negative/flat | Structural headwind continues |
| All-Property (MSCI) | ~7.0% | +3.5% (3yr avg) | Moderate positive |
Data: Carter Jonas Commercial Market Outlook Q1 2026; Savills UK Commercial November 2025; RICS UK Commercial Property Monitor Q1 2026; MSCI Monthly Index April 2026.
Commercial Property Valuation in London: How RES Can Help
Whether you are a private investor, institutional fund, lending institution, occupier or professional adviser, obtaining a robust and defensible commercial property valuation is the starting point for any significant transaction or dispute.
As RICS Regulated chartered surveyors, RES Property Surveyors Limited offers a full range of commercial valuation and surveying services:
RICS Red Book Valuations
For secured lending, acquisition, disposal, portfolio review, probate and tax. All valuations are carried out by RICS Registered Valuers in full compliance with the RICS Valuation – Global Standards (Red Book).
Rent Reviews & Lease Renewals
Our chartered surveyors represent both landlords and tenants in commercial rent review negotiations across office, industrial and retail sectors. We have deep experience in open market rent determination, RICS dispute resolution procedures, and expert and arbitration proceedings.
Commercial Property Valuation London
With offices in Central London and extensive knowledge of the City, West End, South London and wider Greater London market, RES provides focused expertise in commercial property valuation in London including for expert witness, litigation support and Calderbank correspondence.
Dilapidations & Expert Witness
Our chartered surveyors advise on terminal and interim dilapidations schedules, Section 18(1) LTA 1927 diminution valuations, and expert witness reports for court proceedings.
Building Surveys
Full commercial building surveys to RICS standards, identifying structural, services and legal risks on acquisition or lease expiry.
About RES Property Surveyors Limited
RES Property Surveyors Limited is an RICS-regulated firm of chartered surveyors and RICS Registered Valuers based in London. We advise clients across the full spectrum of commercial and residential property services, including commercial property valuation, building surveys, expert witness, rent reviews, dilapidations and lease advisory.
Our team combines technical expertise with commercial pragmatism, and we act for a wide range of clients including private investors, estate trustees, corporate occupiers, banks and legal firms.
3 Waterhouse Square, 138 Holborn, London EC1N 2SW | www.res-prop.com | admin@res-prop.com
This article is for general informational purposes and does not constitute a formal valuation or professional advice. RES Property Surveyors Limited is regulated by the Royal Institution of Chartered Surveyors (RICS). All valuations are carried out in accordance with the RICS Valuation – Global Standards (Red Book).
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