Commercial Property Outlook 2026: Return to Optimism
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After a brief period of global uncertainty, improving economic signals and renewed market confidence are paving the way for a more optimistic outlook in commercial property investment.
At the start of the year, I wrote in these pages about the feeling of a definite turnaround in the economy, which was resulting in an increasing confidence in the commercial property market. Inflation was falling and was expected to reach the magic 2% figure by Q2, and interest rate cuts were contributing to an overall feeling of optimism.
Just 12 days after writing that column President Trump took the decision to launch missiles at Iran. Predictably (to all except the President and his closest advisors), Iran responded by blockading the economically and strategically important Strait of Hormuz, plunging the entire world into a new period of economic uncertainty.
So it is for economic as well as humanitarian reasons that we can all sigh a (cautious) sigh of relief that last week’s signing of the ‘Memorandum of Understanding’ between the US and Iran should lead to both peace and the resumption of more normal activity in the Middle East, something which affects us all.
Coupled with this further positive news last week saw a lower-than-expected inflation figure of 2.8%, unchanged from the previous month. That will almost certainly creep up as the effects of more expensive energy flow through, but hopefully the cessation of hostilities means the peak will not be as high as it would otherwise have been, and it should come down again more quickly.
The Bank of England certainly think so: they opted last week to leave the base rate unchanged at 3.75%, a decision which can be taken as a vote of confidence that the economy is set to get back on track.
So what does this all mean for commercial property investment? Well, the first point is that the commercial property market is very closely linked to the health of the wider economy, so any uplift in economic confidence will be beneficial for investors.
The optimistic predictions I made in February still stand, even if the market has been on ‘Pause’ for the past four months. This is reinforced in the recent Property Investor Report 2026, published by Handelsbanken which shows:
- 93% of their contributors expect their portfolio to increase in value in 2026
- 84% propose to increase their portfolios
- Belief that offices remain the most positive commercial sector
- 89% will be investing in their portfolios for energy efficiency
There may be a hangover period as the world gets moving again, but by Q4, the phrase ‘Return to Optimism’ will be a reality rather than an aspiration.
Guy Gowing is senior partner at Arnolds Keys.
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