May 2026
In this three-minute summary of the retail investment market, agents Mrs. Positive and Mr. Negative present contrasting views.
Mrs Positive: We entered 2026 with cautious optimism. With the combination of base rates in retreat and the occupational market continuing to strengthen, we experienced improving pricing and liquidity throughout 2025. Retail was the best performing sector, and investor demand from shopping centres to retail parks was at its deepest for a decade. The sector is on an upward trajectory. What could go wrong?
Mr Negative: Trump! The US–Iran conflict has driven energy prices and associated costs higher, which will result in inflation remaining elevated for longer. This is particularly pertinent in the UK, which is a major importer and already suffers from the highest energy costs in the developed world. UK Gilts are comfortably the highest among G7 countries, not helped by Starmer and his government’s political infighting and apparent lack of a convincing growth strategy.
Mrs P: Retailers are lean having weathered Covid and survived structural change of 2010’s. The strongest operators have adapted quickly, improving operational efficiency, rationalising store estates and investing heavily in omnichannel strategies. Rents and business rates have corrected and, once inflationary impacts are fully understood and absorbed through selective price increases, occupational demand for the right product remains very strong. We will continue to see meaningful rental growth in the best centres.
Mr N: Commercial property transactions require stability and dramatic volatility in markets is not conducive to business. Debt costs are now on an upward trajectory, combined with rising employment, energy & supply chain costs, and damp consumer spending; we are already beginning to see an increase in restructurings, CVAs and insolvencies. With Poundstretcher, TG Jones and rumours of other discounters and mid-market fashion there is going to be a glut of medium sized units available in locations with limited demand and high capex to resolve. These issues could start to impact investor confidence and asset pricing.
Mrs P: Rents and capital values have rebased, cashflows are sustainable and the sector is compelling vs other sectors. Debt is increasingly available and is accretive for the majority of retail assets, helping to drive returns and pricing. The occupier market is polarised, in the top 50 retail locations demand is positive and in a lot of situations landlords would like space back to drive rental growth.
Mr N: The depth of the buyer pool for core and add value assets is encouraging, most assets are going to rounds of bids. 2026 was the year everyone predicted central banks were going to meaningfully cut rates which would have driven the market with core plus money potentially re-entering the market. With inflation now heading in the wrong direction and investment banks pricing in potentially two or three rate increases, how much will this impact investor demand and liquidity? There is an air bubble in the system, meaning all the positivity and assets lined up to market after Easter will be at best September.
Mrs P: Not all retail has/will fare the same. Experiential and convenience centres continue to perform well with selective rental growth off rebased rents. The investment market is following a similar path. Capital seeking super prime assets is growing and is a catalyst for others entering the sector, encouraging more institutional capital to invest in high quality stock for the first time this decade. Other sectors are not immune to the macro-economic picture, and the fact remains that retail yields, and particularly shopping centre yields and retail estates remain attractive compared to other asset classes.
GCW: Our opinion is that the retail market offers compelling value vs other sectors. Success will increasingly depend on identifying the right assets in the right locations with the right tenant mix. The sector is displaying a convincing balance of resilience and opportunity in the right pitches and locations.