On 26 November 2025, the government unveiled the Autumn Budget 2025. As analysed by Knight Frank, the Budget did not bring any dramatic “shock-and-awe” measures - instead, it was framed around reform, investment and stability.
From a capital markets standpoint, the outcome has been broadly “steady rather than spectacular.” Gilts have softened slightly, and there is growing investor confidence that interest rates (and so financing costs) may ease from late 2026 into 2027, which could improve conditions for real estate investment.
In short: for many in the commercial real estate (CRE) world, the Budget delivers a return of policy clarity - a foundational requirement for investors preparing to act rather than remain on the sidelines.
What Changes Mean for Different Segments
— Office, Regional and City-Centre CRE
The government kept corporation tax at 25%, maintaining a stable business-tax horizon for firms.
For central-London offices in sectors such as finance and professional services, the Budget’s stability and intention to revive UK capital markets may encourage firms to at least consider expansion - though higher living and employment costs could restrain aggressive hiring or growth plans.
Investors are likely to take a more selective approach. According to Knight Frank, while prime, ESG-aligned buildings remain attractive, secondary or ageing buildings without a clear repositioning plan may struggle - especially given limited support for sustainable refurbishment.
— Industrial, Logistics & Data-Centres
One of the more potentially positive knock-on effects concerns the logistics and industrial sector. The Budget confirmed the planned phase-out (by 2029) of the UK’s “de minimis” import-duty exemption for low-value parcels. This change is expected to shift supply-chain behaviour: more warehousing, fulfilment and domestic distribution capacity will likely be needed - boosting demand for logistics space.
Meanwhile, continued governmental support for innovation, digital infrastructure, and cleaner energy is broadly encouraging for data centres and “future-proof” industrial real estate, even though the Budget offered limited new policies specific to data-centre real estate.
— Regional and Smaller Cities
The Budget reaffirmed commitments to regional infrastructure and devolved authority in some combined-authority areas. In principle, this could benefit CRE outside London over time, improving connectivity, unlocking regeneration and increasing attractiveness for both business and investment.
For regional landlords and investors, this increased certainty may encourage longer-term planning ahead of potential growth, though success will depend heavily on whether those infrastructure investments are delivered.
Risks, Constraints, and Lingering Concerns
The Budget’s lack of major giveaways is itself a double-edged sword. While clarity is welcome, many of the long-term structural issues facing CRE remain unaddressed:
As noted by analysts at BNP Paribas Real Estate, despite short-term promise, long-term fiscal uncertainty remains a drag. Elevated borrowing across forecast years and tight spreads between property yields and risk-free rates may continue to make underwriting new investments challenging.
For sectors like retail and hospitality - which share some overlap with commercial real estate - the Budget offers little relief. Higher operating costs (e.g. via rising wages), combined with business-rates pressure (particularly for high-value or high-rateable-value properties), may squeeze margins and increase vacancy or turnover risk.
Because many of the tax and regulatory shifts (e.g. customs regime change, duty multipliers, business rates reform) will be phased in over years, there is a period of uncertainty during which investors may remain cautious - potentially suppressing volumes in 2026.
What to Watch — Key Variables for 2026 and Beyond
Interest rates / cost of capital. If base rates begin to fall as anticipated, financing and refinancing will become cheaper, improving yield spreads and potentially prompting renewed investment.
Delivery of infrastructure and regional commitments. Promises around rail links, regional regeneration and development funding could transform previously under-invested areas - but only if implemented.
Demand shifts: logistics, data, flexibility. Growth of e-commerce, reshoring supply chains, and demand for data/infrastructure may tilt demand toward industrial/logistics and flexible-use real estate over traditional office/retail.
Legislative/tax environment. Gradual but significant reforms (e.g. business rates multipliers, customs changes, cost pressures) may reshape the comparative attractiveness of asset classes.
The Autumn Budget 2025 does not radically reinvent the UK commercial real estate landscape, but it does restore a baseline of policy clarity and market calm that many in the sector have been waiting for. For investors and occupiers with a long-term horizon, this offers a window of opportunity to position thoughtfully.
That said, the Budget alone is not a panacea. Real estate conditions will continue to hinge on how effectively broader economic and fiscal challenges are managed, how quickly interest rates fall (if they do), and whether structural shifts in supply, demand, and regulation play out as anticipated.
For now: a steady hand, not a bold new course - but one that, especially for industrial, logistics and regional markets, could set the stage for more meaningful movement over the next 2–3 years.
Sources: Knight Frank, BNP Paribas Real Estate, British Property Foundation