FACING THE FUTURE WITH INCREASING CONFIDENCE

Three months on from Rachel Reeves’ second Budget, and the appalling ‘market research’ before it which resulted in a confidence dent in many markets, a clearer picture is now emerging of a commercial property market settling down after a long period of uncertainty, writes Guy Gowing. 

Whilst it’s not without its challenges, a number of factors are resulting in a confidence boost, with Rightmove’s latest Commercial Insights Tracker predicting that 2026 will be ‘a more positive year for commercial property’ which will see a ‘recovery in investment activity’.

Certainly the downward trend in interest rates, coupled with a widespread expectation that inflation will be back down to a more acceptable 2%, perhaps as early as Q2, is contributing to a sense of optimism that was lacking during the months of uncertainty leading up to the November Budget.  So what does this mean for the market in Norfolk?

In the office sector, the continuing trend towards ‘Return to Office’ is resulting in strong demand for Grade A office space, especially in Norwich.  A shortage of supply at this end of the market is driving up rents, and £20 per square foot could well become the norm before the year is out.

Higher rents may eventually lead to the return of speculative office development, but we are not really seeing this just yet.  However, there is considerable amount of improvement work being undertaken to older offices, as occupiers realise they need to create attractive workspaces to encourage their staff back into the office.

The strong performance of industrial and warehousing buildings continues apace, particularly in the distribution sector, which is swallowing up large warehouse spaces avariciously.  There will be some very big deals to be done in 2026 – expect to see many more 30,000 sq ft plus leases signed.

At the other end of the scale, there is an insatiable demand for quality industrial starter units (between 1,000 and 1,500 sq ft), with rents of £14 per square foot commonplace – it is not so long ago that this was the going rate for Grade A city offices!  This demand is countywide, with market towns faring especially well, as smaller businesses aim to stay local to their workforce.

Much has been written about the travails of the retail sector, but as I have said many times, reports of the death of the High Street are very wide of the mark – although it continues to evolve.  We are seeing bigger operators increasingly moving out of town, to be replaced in the city centre by experiential shopping.  Local convenience retail is doing well (something which has been the case since the pandemic), with city suburbs such as Unthank Road, Thorpe Road and Plumstead Road all thriving.

The situation in market towns in mixed.  Those that are prospering are the ones which have put in place a thought-through retail strategy, and in particular where there is ample and free/cheap parking – this last factor is absolutely crucial.

Norfolk, and Norwich in particular, is increasingly on the map for national investment.  Our strong service sector economy, improved and improving access, and our emerging technology in hi-tech engineering specialisms are all making our county an attractive place to invest. 

All of which hopefully means we can put the uncertainties of the last 12 months behind us and look forward to the rest of the year and beyond with increased confidence.