Commercial real estate investment will hit between £43 billion and £48 billion in 2026, up as much as 15% on 2025, according to JLL in its annual predictions for the year ahead.
Unveiling the global broker's forecasts for 2026 at Deutsche Bank's offices at 21 Moorfields this morning in the City, Nick Whitten, JLL's new head of research in the UK, said offices would return to being the most invested commercial real estate asset class ahead of the living sector with around £15 billion or 35% of the total. That would split between around £10 billion to £12 billion focused on London, and £3 billion to £5 billion focused on the regions.
Whitten said JLL predicts total investment in commercial real estate in the UK will have lifted to around £54 billion annually in 2030.
Elsewhere, Whitten said rents in four of the six big regional markets - Bristol, Edinburgh, Manchester and Birmingham - will have topped £60 per square foot by 2030, driven by extremely limited new supply.
JLL said the return of investment into office was being driven by the return of core capital and the improving debt position on the back of a lower base rate.
Whitten said shopping centres will also perform well with 2026 set to be the best year for the sector since 2016. Prime shopping centre yields are expected to compress in the year ahead from 7.5%, which will represent only the second compression seen for prime shopping centres in the past 10 years. JLL also forecasts the year will mark a resurgence for physical retail and that physical retail spend will outpace online growth over the next few years with an extra £34 billion spent in stores versus £29 billion online.
For the industrial and logistics sector JLL highlighted the strength of the occupational market in the big box space. Over the course of the year demand will exceed 25.5 million square feet in 2026, the highest year on record, outside the Covid peak years (2020-2022). JLL also pointed to a drop in supply which could lead to stronger rental growth in the sector.
Regarding residential JLL’s forecasts predicted that 2026 could see new housing starts fall to 150,000. The upside of this, according to Whitten, is that it could mark the bottom of the national supply crisis and that relaxed planning, the super-sized £39 billion Affordable Homes Programme and some returning forward funding Build to rent activity could begin to unlock new schemes.
The next few years ahead will also see regional data centre expansion, according to JLL’s forecasts. A swing to delivering data centres in the regions will see the rest of the UK grow from hundreds of MWs of data centre space to 2.25GWs capacity - twice the amount of London - driven by AI demand and government growth zones.
The UK’s clean energy capacity is also expected to see significant growth with new solar, wind and battery storage schemes being created by 2030, supported by a new "first-ready, first-connected" grid connection system replacing the previous first-come model. This means 95% of UK electricity will come from green sources by end of the decade.
Whitten said: “It is a pretty volatile and complex world right now. But 2026 looks set to be a year of opportunity for the UK real estate market marking the start of a new, more positive, cycle. We are expecting rising transaction volumes against a solid macroeconomic backdrop. These rising volumes will be notable for offices and shopping centres. Demand is predicted to be particularly strong for logistics and rental housing. But delivering new supply remains a significant challenge across almost all sectors in the UK."
Hannah Dwyer, Head of Work Dynamics Research, EMEA, said JLL expected six key trends to drive the market globally - cost pressures, supply shortages, the importance of experience in real estate, AI and a widening divide between those still piloting its use and those successfully adopting the technology, energy, and the diversification of sectors investing in real estate.
In a panel debate, Wendy Cuthbert, vice-president of workplace at BP, said at the top of the list of issues facing corporates when looking at real estate was the relentless need to be more efficient on costs. She also warned that there was a growing mismatch between the business strategies for real estate, enabled by the use of AI technology, and the speed at which the real estate industry was responding. "This is increasingly out of kilter."
Ruth Jackson, UK head of investment management at M&G Real Estate, said the group's ability to reimagine the kind of workplace it was developing at its 40 Leadenhall scheme in the City during the pandemic pointed to the constant need to adapt to changing occupier requirements while continuing to take a long-term view.
Richard Bloxam, CEO capital markets at JLL, said the year would see greater democratisation of access to real estate investment, with more new channels of capital being deployed.
Matthew Richards, CEO of JLL, UK and EMEA, said the key question was how to see through the undoubted geopolitical events there would be again in 2026. "This year will be better than 2025 but it will be about employing data and analytics and research to see past the noise."