Greater ‘certainty’ would unlock commercial property investments, the sector’s lawyers tell Maria Shahid. Can a new prime minister, with a record of regeneration in the north-west, restore confidence?
The low down
Investors stand ready to back the contribution of commercial property to the UK’s elusive economic growth, lawyers say. Better environmental and safety standards are not impediments to deals that will unlock uninvested capital, and the new prime minister Andy Burnham’s record of leading regeneration and growth as mayor of Manchester has raised expectations. What is wanted is certainty – around regulatory requirements, speed of planning decisions and, more intractably, the course of wars in the Middle East and Ukraine. Conflict has pushed up energy costs and the price of debt. Commercial property investments are down 40% on the five-year average. On a positive note, the sector has more confidence long‑term.
The regeneration of Greater Manchester is a central part of newly minted prime minister Andy Burnham’s story. Manchester under his tenure as mayor grew its reputation as a commercially confident city. One test of Burnham’s premiership will be whether he can inspire the same confidence among commercial property investors and their lawyers as they navigate an uncertain economic and geopolitical landscape.
The latest annual report from Real Estate:UK, the body representing the £950bn UK commercial property sector, and market data and analytics provider CoStar showed total UK commercial property investment reached £9.7bn in Q1 2026. That is nearly 40% down on the five-year first-quarter average.
The report blames a combination of global uncertainty caused by continuing trade tensions with the US and escalation of conflict in the Middle East, which has had knock-on effects for the price of energy and the cost of debt.
Will to transact
Nevertheless, ‘client confidence is cautiously optimistic,’ says Stewart Nicholson, a senior associate at Ellisons in Colchester. ‘The long-term outlook is positive, but in the short-term businesses are still dealing with higher borrowing costs, inflation and geopolitical uncertainty. The appetite to invest is still there – clients are just being more selective and taking a little more time over investment decisions.’
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Ali Crosthwaite, partner and head of real estate at Simmons & Simmons agrees: ‘We are definitely starting to see an uptick in deal flow and transactional volume. Real estate clients want to transact.
‘Data centres have been unaffected [by geopolitical events]. They are almost in a class of their own,’ she adds. ‘The living sector has held up as well, which is an area of interest for a lot of our client base, and offices are starting to come back, but you definitely get the sense that people are being far more selective. There are opportunities, but people are being very circumspect about which ones and really digging into the business plan and looking at what that’s going to look like.’
The fact of a change of prime minister will have done little to improve confidence. Vanessa Hale, CEO of Real Estate:UK noted at the time of Sir Keir Starmer’s resignation: ‘The prospect of our seventh prime minister in the last 10 years is doing little to position the UK internationally as a stable location for investment.’
Be more Manchester
Burnham’s leadership of Greater Manchester helped transform the city into one of opportunity and has shown the potential of ‘place-based’ policy-making, often dubbed ‘Manchesterism’, his supporters say. The city-region has been one of the fastest-growing outside London, recording economic growth of around 17.4% between 2019 and 2023, while continuing to attract significant investment into office and residential development, as well as logistics.
The ‘Good Growth’ model championed by mayor Burnham, which uses public money for regeneration schemes and to attract private investment, is one he intends replicating elsewhere, say his former advisers and Labour insiders.
The sector has been cautiously optimistic in welcoming Burnham’s decentralised approach, which has already been symbolically evident in the creation of a ‘No. 10 North’, and a stronger Whitehall presence in Manchester.
CoStar and Real Estate:UK’s report, published in May, also noted that the government ‘needs to redouble efforts to promote and redevelop regional investment opportunities’. The UK’s regional markets attracted £17bn last year, 23% down on 2023-24 and 53% of all investment, which is the lowest share in four years. That points to ‘weakening regional appetite’.
‘Greater Manchester has shown what’s possible through long-term investment and greater local decision-making,’ says Nicholson. ‘There isn’t a single blueprint for growth. But bringing a track record of driving economic prosperity outside London is a real strength, and if local areas are given the flexibility to build on their own strengths, I think there’s every reason to be optimistic.’
Regional devolution of economic development, housing, transport and infrastructure investment are high on Burnham’s agenda.
Devolution should also, in theory, lead to quicker planning decisions, through a more joined-up approach. That can only be good for development activity, but lawyers remain cautious in their optimism.
‘I think the property industry is adopting a bit of a “wait and see” approach at the moment,’ says Crosthwaite.
In the meantime, Burnham’s cabinet selections, announced last week, have been broadly welcomed by the sector. Hale noted that the appointments of Angela Rayner as housing secretary; John Healey, a former housing minister, as chancellor; and the reappointment of Matthew Pennycook as housing minister were all positive. But she warned that ‘the same challenges remain both for the economy and for real estate in particular’, notably the ‘development viability challenges stymieing new homes and commercial space’.
The confirmation by Rayner in late July that rent controls would not be introduced were similarly welcome, with experts fearing that their imposition would deter institutional investment.
