The second quarter of 2025 has again been a muted one for UK commercial real estate investment and leasing in many areas, a backdrop that has not prevented standout deals from being completing, and being recognised in CoStar's Quarterly Agency Awards.
Provisional figures from CoStar suggest around £8 billion changed hands during the quarter, with the uncertainty around global tariffs sparked by President Trump's Liberation Day announcements and concerns over the impact of global conflict holding back decision-makers.
That figure would be down from the first-quarter transaction level of £9.3 billion reported by Lambert Smith Hampton, itself a 35% decline from the final quarter of 2024’s two-and-a-half-year high and the lowest quarterly total since the third quarter of 2023.
There have been positives though, and not just in the "beds and sheds" arena, which has continued to be in favour with investors. "Beds", in the shape of care homes, have been in particular demand, lead by a £450 million sale of a Care REIT property portfolio and Four Seasons' 46-asset sale to Omega Healthcare investors for £241 million.
Industrial leasing continued to be solid with over 6.3 million square feet of big-box space taken across 27 transactions, meaning the half-year total was 13.1 million square feet or 7% ahead of the pre-Covid first half average, according to DTRE. The adviser says it is unaware of any recent deals that have stalled due to the introduction of tariffs by the US. Rather, it points to examples of Chinese e-commerce and third-party logistics providers taking space in the UK in anticipation of tariff disruption, which has aided take-up numbers.
A particular area for positivity was UK office leasing. CoStar data shows national take-up surged to its highest level since the pandemic began in the second quarter.
Just under 11 million square feet of new office lease agreements were signed in the three months to June, based on initial estimates. This is up 15% on the previous quarter and a 17% increase on the corresponding period last year. While the figures are still below the pre-pandemic five-year average of just over 12 million square feet, they represent the strongest quarter for office take-up since the third quarter of 2019 and continued the upward momentum that began to be seen towards the end of last year.
The take-up has been boosted by several blockbuster lettings. Eight deals for spaces over 100,000 square feet were signed in the first half of 2025, up from five in the first half of last year, so it is no surprise to find so many picking up CoStar awards this quarter.
Next quarter's CoStar Agency Awards will hopefully show more evidence of recovery across all sectors.
Importantly the lower activity is increasingly more a factor of a shortage of stock than a lack of demand as vendors look for greater certainty on pricing. Knight Frank points out this is clearly the case with all retail subsectors.
Total retail investment volumes in the first half of the year stood at £2.51 billion, it says, in line with the first half of 2024 but significantly below the 10-year average of £3.65 billion. But it adds: "As pricing strengthens and rental growth continues, we anticipate more disposals from owners looking to profit from these recent gains."
Top sale
State Street lifts London offices with mega commitment
The completion by London development stalwart Helical and a vehicle managed by Orion Capital Managers of the £333 million forward sale of their 100 New Bridge Street City of London development in an owner-occupier transaction is one of the bellwether office acquisitions of recent years.
The buyer has still not been formally disclosed but CoStar News revealed in January that US bank State Street was the party in talks to buy the building in one of the largest office transactions seen since the pandemic lockdowns started.
The transaction typified a trend for major corporates to use their financial muscle to buy their headquarters rather than lease them. It also represented another strong commitment by corporate America to bringing staff back to offices, and to London and the UK.
Ingleby Trice and Knight Frank represented the seller. JLL represented the buyer.
Top office lease
JPMorgan lands giant letting to fellow American financial powerhouse
JP Morgan Asset Management's prelet to Squarepoint, the global investment management firm, of the entire 400,000-square-foot 65 Gresham Street development in the City is the UK’s largest office letting in nearly two years.
The deal was revealed by CoStar News in April. The Squire & Partners-designed redevelopment was until recently the long-term home of Avison Young and is scheduled for completion for occupation in 2028. The £200 million scheme is one of the largest building reuse projects in the City of London, avoiding demolition through large scale reuse and regeneration.
In a massive expansionary move, US global investment management firm Squarepoint is relocating from Brookfield's 36-storey Citypoint tower in the City where it occupies around 100,000 square feet.
Squarepoint was advised by CBRE. JPMorgan Asset Management was represented by RX London.
Top Industrial Lease
Panattoni lands mega letting at Bristol hub in another deal first revealed by CoStar News
Panattoni's letting of an 885,000-square-foot warehouse in Bristol to logistics giant GXO at Avonmouth 885 marked the return of a very big box deal.
It is understood that GXO has taken the shed to deliver a contract it has agreed with ecommerce giant Amazon, with CoStar News revealing in July last year that the online retail giant was set to occupy the Avonmouth facility.
The deal is the latest large letting by Panattoni, which agreed to lease a 345,000-square-foot unit to warehouse solutions and last-mile delivery business Super Smart Service in April, as revealed by CoStar News.
The building has been advertised as the largest speculatively built warehouse in the UK, in tandem with a circa 410,000-square-foot sister which is vacant.
GXO's deal in Avonmouth adds to the momentum building in the South West industrial market, with CoStar News revealing earlier this year that Waitrose was to take premises of around 400,000 square feet in the area.
Colliers, DTRE, JLL and Savills acted for Panattoni.
Top Retail Lease
M&S signs for the stand-out retail letting of the quarter, again
Marks & Spencer has once again topped the CoStar quarterly agency charts for biggest retail lease, this time after the high street stalwart and a consortium of lenders that owns Merry Hill in Dudley in the West Midlands agreed to a major expansion of the retailer's presence at the shopping centre.
M&S has been at Merry Hill for 35 years and will now consolidate its two stores at the mall — the womenswear, home and food store and the menswear and childrenswear store — to create an expanded space in the womenswear store and two adjacent units.
The 93,000-square-foot store will be located next to Primark and will include a full fashion collection across womenswear, kidswear and menswear, as well as larger home and beauty departments. The refurbished store opens in late 2025.
JLL, Time Retail Partners and Font Real Estate represent Merry Hill, the eighth largest shopping centre in the UK.