Whilst it’s not without its challenges, a number of factors are resulting in a confidence boost, with Rightmove’s latest Commercial Insights Tracker predicting that 2026 will be ‘a more positive year for commercial property’, which will see a ‘recovery in investment activity’.
Certainly the downward trend in interest rates, coupled with a widespread expectation that inflation will be back down to a more acceptable 2pc, perhaps as early as Q2, is contributing to a sense of optimism that was lacking during the months of uncertainty leading up to the November Budget.
So what does this mean for the market in Norfolk?
In the office sector, the continuing trend towards ‘return to office’ is resulting in strong demand for grade ‘A’ office space, especially in Norwich. A shortage of supply at this end of the market is driving up rents, and £20 per square foot could well become the norm before the year is out.
Higher rents may eventually lead to the return of speculative office development, but we are not really seeing this just yet. However, there is a considerable amount of improvement work being undertaken to older offices, as occupiers realise they need to create attractive workspaces to encourage their staff back into the office.
The strong performance of industrial and warehousing buildings continues apace, particularly in the distribution sector. There will be some very big deals to be done in 2026.
At the other end of the scale, there is an insatiable demand for quality industrial starter units (between 1,000 and 1,500 sq ft), with rents of £14 per square foot commonplace – it is not long since this was the going rate for grade ‘A’ city offices! This demand is countywide, with market towns faring especially well, as smaller businesses aim to stay local to their workforce.
Much has been written about the travails of the retail sector, but as I have said many times, reports of the death of the high street are very wide of the mark – although it continues to evolve. We are seeing bigger operators increasingly moving out of town, to be replaced in the city centre by experiential shopping.
Local convenience retail is doing well (which has been the case since the pandemic), with city suburbs such as Unthank Road, Thorpe Road and Plumstead Road all thriving.
The situation in market towns is mixed. Those that are prospering are the ones which have implemented a thought-through retail strategy, and in particular where there is ample and free/cheap parking – this last factor is absolutely crucial.
Guy Gowing is senior partner at Arnolds Keys. Visit arnoldskeys.com