UK commercial property attracts £24.3bn as demand shifts
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Investment in UK commercial property reached £24.3 billion in the year to July, slightly ahead of the same period in 2025. Yet the headline figure hides wide differences between sectors, locations and property types.
International investors accounted for 46% of transaction volumes, according to Colliers’ UK Property Snapshot for August 2026. London attracted £9.2 billion, while offices represented 26% of investment activity nationally.
The wider economy is also sending mixed signals. UK GDP grew by 0.4% in the second quarter, following 0.6% growth in the first three months of the year. Services grew by 0.5% and construction by 0.3%, while production was flat.
At the same time, consumer price inflation rose from 2.6% in June to 2.9% in July. Bank Rate remains at 3.75%, with three members of the Bank of England’s Monetary Policy Committee voting in July for an increase to 4%.
Commercial property is therefore operating against a backdrop of modest economic growth, higher inflation and borrowing costs that remain well above the levels seen before 2022.
The strongest property figures suggest that investors and occupiers are responding by becoming more selective about where they commit capital.
Logistics demand puts the Midlands ahead
Industrial property was one of the strongest investment sectors in July.
Investment increased from £530 million in June to £1.2 billion in July, moving above the five-year monthly average. Although industrial investment for the year to date remained below 2025 levels, occupier activity gives a clearer indication of where demand remains firm.
Take-up of logistics units larger than 100,000 sq ft reached just under 15 million sq ft during the first half of 2026. The Midlands accounted for 61% of this activity.
The figures strengthen the region’s position at the centre of the UK logistics market. For manufacturers, retailers and distribution businesses, the Midlands offers access to major road networks and a large share of the UK population. These factors continue to influence decisions about where businesses locate warehouses and distribution operations.
Vacancy in the industrial market stood at 8.6%, in line with the long-term average. This suggests a more balanced market than during the severe shortage of space seen earlier in the decade.
For developers and investors, that balance changes the investment case. Strong occupier activity can support demand, but higher availability gives businesses more choice.
Location remains important, but it is not the only factor. Building specification, energy performance, access to labour and the ability to support modern distribution operations are also shaping property decisions.
Office demand shows why asset quality matters
A similar pattern is emerging in the office market, particularly in London.
London office take-up increased from 2.4 million sq ft in the first quarter to 2.8 million sq ft in the second. That was about 4% above the ten-year average.
However, Grade A buildings accounted for 76% of leasing activity. Vacancy also fell from 9.4% a year earlier to 8.3%, while annual office rental growth reached 3% in July.
The figures suggest that demand is concentrating in higher-quality buildings rather than spreading evenly across the market.
This distinction matters for owners of older properties. A rise in overall take-up does not automatically improve the outlook for every building. Businesses may use property decisions to support recruitment, staff retention, energy targets and changes in how office space is used.
Investment figures show some of this caution. Office investment fell from £1.3 billion in June to £670 million in July, below the £1.1 billion monthly average. Even so, investment for the year to date remained broadly in line with 2024 and 2025.
The office market therefore presents a more complex picture than the headline figures suggest. Overall investment remains relatively steady, but occupier demand is increasingly focused on the best-quality space.
Sector differences are becoming harder to ignore
Other parts of the property market show why the £24.3 billion investment total needs context.
Retail investment fell from £490 million in June to £350 million in July. That was well below the five-year monthly average of £660 million, while investment for the year to date was 47% lower than during the same period in 2025.
Hotels have moved in the opposite direction. Investment reached £2.8 billion during the year to July, more than double the comparable 2025 figure. This came despite July investment falling to £270 million, below its long-term monthly average.
Residential property also presents a mixed picture. Investment was 60% ahead of the same stage last year, but monthly volumes dropped from a revised £1 billion in June to £210 million in July.
Purpose-built student accommodation was weaker. Investment reached £420 million in the year to July, compared with £1.8 billion during the same period in 2025.
These differences make broad descriptions of a UK commercial property recovery less useful.
Capital is increasing in some areas while remaining subdued in others. Occupier demand is also favouring certain types of property. Logistics activity in the Midlands and Grade A office take-up in London are among the clearest examples.
The economic backdrop may keep this pattern in place. GDP is growing, but inflation remains above the Bank of England’s 2% target and borrowing costs are still relatively high.
For property owners, developers and occupiers, the direction of the wider market may therefore be less important than the position of an individual asset within it. Location, specification and occupier demand are becoming stronger indicators of where investment is likely to remain firm.
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