As the Chancellor prepares her second full Budget, the commercial property market is showing signs of cautious optimism. While headlines in recent months have often focused on higher costs of capital and stubborn inflation, there is growing evidence that investors and occupiers alike are preparing to move ahead with transactions in the run-up to November. The reasoning is simple: clarity is coming, and with it, the potential for growth.
At the recent CPN Investment Panel meeting, members reflected that while measures such as the rise in National Insurance have undoubtedly hit smaller businesses — with a knock-on effect for occupiers of smaller commercial units — the overall outlook remains positive. The general feeling was that there are some excellent opportunities in the market right now, and that investors, particularly those with cash reserves, are well placed to seize them.
Pent-Up Demand and a Pre-Budget Window
Research from Barclays’ latest Business Prosperity Index found that 55% of UK firms are delaying investment decisions until after the Budget, yet nearly 43% expect to increase investment following the announcements — a figure that rises to 58% among larger businesses. For the commercial property market, this signals a surge of deal activity as investors seek to position themselves ahead of potential tax changes.
This is especially true where capital gains and business rates are concerned. The Chancellor has already hinted at reforms to property taxation. According to Reuters, Rachel Reeves is considering changes to business property tax structures to “ease the cliff-edges” for SMEs — a move that could stimulate demand for smaller, growth-orientated spaces.
Confidence Returning to Investors
Beyond the Budget, wider investor sentiment is turning more positive. A British Chambers of Commerce survey revealed that 53% of retail investors feel optimistic about the next 12 months, up from 42% earlier this year. Meanwhile, City A.M. recently reported that London business owners show the highest confidence levels in the country, with technology, sustainability, and private equity as leading growth priorities.
For commercial property, this creates a ripple effect. Demand for high-quality office space with strong ESG credentials, logistics hubs serving the e-commerce sector, and flexible mixed-use schemes is rising in line with business expansion plans.
As the Chancellor, Rachel Reeves herself put it: “If growth is the challenge, then investment is the solution — and I want to work with you to deliver that.” (Rachel Reeves, quoted in Business Leader). This pro-growth tone is being noted by the market.
The Risk of Waiting Too Long
A potential motivator for deal activity in the coming weeks is the risk of further taxation. If capital gains or stamp duty changes are introduced, those who transact earlier could lock in current terms. As one senior fund manager put it privately: “Markets dislike uncertainty, and in property deals, certainty of today often outweighs the unknowns of tomorrow.”
The Caveats
Of course, challenges remain. Interest rates — though falling slowly — are still impacting yields and financing costs. Occupiers continue to face cost pressures, particularly in retail and hospitality. And while the Chancellor has promised regulatory reform, implementation may take time to filter through into day-to-day investment decisions.
Moreover, as George Weston, CEO of Associated British Foods, warned ahead of the Budget: “Consumer sentiment must not take another great whack.” Overly aggressive tax measures could dampen the very optimism now returning to the market.
Outlook
For The CPN members and wider market participants, the message is clear: opportunity is emerging. The next few months may see sharper-than-usual activity in acquisitions, disposals, and financing deals as investors seek to get ahead of potential fiscal tightening. With cautious optimism in the air, commercial property is once again at the forefront of the UK’s growth story.