"Rate cuts are helping investment into commercial property, and after a period of decline, it appears that retail and office spaces are becoming more attractive to invest in"
- Andy Miles - Rightmove
Investor demand for UK retail property has risen sharply over the past year, marking a significant turnaround for the sector as interest rates continue to ease.
New data from Rightmove shows a 35% year-on-year increase in enquiries to commercial agents about retail property listings in the most recent three-month period. This compares with a 15% year-on-year decline at the same point in 2024, indicating a marked shift in investor sentiment.
High-street retail properties are leading the recovery, with demand up by 56% compared to the same period last year, the highest level recorded since 2021. Lower interest rates, including the Bank of England’s second base rate cut of 2025 in May, have played a key role in encouraging greater investment.
Overall demand for commercial property investment is now 20% higher than in Q2 2024, reflecting broader market improvements as financing conditions continue to improve.
Falling availability may also be influencing the rise in investor interest. The supply of retail properties listed for investment has declined by 4% compared with the previous year, continuing a downward trend that began at the start of 2024.
Demand from occupiers has increased alongside investor interest. Enquiries from businesses looking to lease retail premises are up 10% year-on-year, suggesting continued confidence in physical retail despite the ongoing growth of e-commerce.
The office sector is also seeing renewed interest. Demand to invest in office space is 65% higher than in the same period last year, reversing a 13% annual decline recorded in 2024. Enquiries to lease office space are also on the rise, up by 12% compared to last year.
In London, leasing interest in office space is up 14% year-on-year, with specific growth in central areas such as Westminster (up 29%) and the City of London (up 21%).
The industrial sector has seen the strongest overall performance this quarter. Investment demand for industrial space has surged by 105% compared with a year earlier, while demand to lease industrial properties has risen by 41%.
“The growth of the industrial sector has been one of the main stories so far this year, but we can see a resurgence to invest in retail and office space too,” said Andy Miles, Rightmove’s managing director of commercial real estate. “Rate cuts are helping investment into commercial property, and after a period of decline, it appears that retail and office spaces are becoming more attractive to invest in.”
“Bank of England base rate has fallen as expected over the past 12 months and general consensus is that we’ll see further reductions this year,” added Miles. “The reduction in base rate is much welcomed and coupled with a narrowing of interest rate margins, the overall cost of borrowing continues to fall, making investment more attractive.”
