Mid-Year Spotlight: Insights, Evidence & What's Next

2026 Mid-Year Insights

• Occuper Demand Remains Resilient: While wider economic conditions continue to create uncertainty, there remains a strong core level of occupier activity across the market. Demand has been particularly driven by businesses that require proximity to their customer base, whether servicing local contracts or supporting operations across central London. This underlying demand has helped maintain transactional activity despite broader economic challenges and continues to support rental levels across well-located industrial estates. 
• Secondary Space is Becoming Increasingly Valuable: Although vacancy rates have risen for some new-build and high-specification refurbished units, availability of secondary and tertiary stock remains limited in several size brackets across North and East London. As occupiers carefully manage costs, many are seeking more affordable relocation options rather than moving into premium accommodation. This has created strong demand for well-located secondary units, particularly where businesses can achieve operational efficiencies without taking on significantly higher occupation costs. The result is an increasingly segmented market, where affordability and location are often taking precedence over specification.
• Location Continues to Drive Decision Making: Occupiers remain highly focused on securing premises in locations that support their operational requirements and customer networks. For many businesses, proximity to Central London and key transport routes continues to outweigh wider economic concerns. Demand has been particularly strong from businesses servicing local contracts or requiring access to a Central London customer base, reinforcing the importance of well-connected industrial locations. This trend is reflected in the 37 transactions we completed across North and East London during the first half of 2026, totalling 395,218 sq ft of industrial and logistics space. As a result, strategically positioned estates continue to outperform with occupiers prioritising access to customers, labour and distribution networks when making property decisions. 

Looking Ahead: Two Predictions for the Remainder of 2026

• Vacant Stock Will Continue to Be Absorbed: With very limited development activity across North and East London, exisiting availability is expected to continue being absorbed throughout the remainder of the year. This is likely to apply across all specifications of industrial space, as occupiers remain active and opportunities for new supply remain constrained.
• Developers Will Begin Returning to the Market: As underlying occupier demand remains strong and competition for industrial sites from alternative uses, particularly residential development, continues to soften, we expect industrial developers to gradually return to the market. While development activity is unlikely to accelerate rapidly, improving market fundamentals and continued demand are expected to create greater confidence for new industrial schemes over the coming months.

2026 Mid-Year Insights

• The Market Responds to the Upwards-Only Rent Review Ban: Following Royal Assent of the legislation banning upwards-only rent reviews, landlords and tenants have moved quickly to agree lease renewals before the new rules come into force. Discussions have been increasingly centred around alternative rent review mechanisms, including index-linked reviews, fixed uplifts and more flexible lease structures. The result is a shift towards shorter, more adaptable lease arrangements, with rent review provisions becoming a key focus of negotiations rather than a standard clause.
• Occupational Costs Are Driving Greater Flexibility: The introduction of the 2026 Rating List and the reduction of several business rates reliefs have increased costs for many occupiers. This has created additional pressure during lease renewals and rent reviews, with tenants often unable or unwilling to absorb significant rental increases. Across the market, landlords are responding with more pragmatic solutions to maintain occupancy. We recently agreed a stepped rent structure for a landlord at 41 Artillery Lane, Spitalfields, allowing a 35% rental increase to be phased in over five years. Equally, a rent review instruction in Winchmore Hill highlighted increasing vacancies within the food and beverage sector, demonstrating the continued pressure on occupiers in some secondary retail locations.
• Industrial Demand Continues to Support Rental Growth: Industrial property remains one of the strongest sectors in the market, with rental growth continuing across many locations. Demand for smaller units, particularly in the 3,000-5,000 sq ft range, has remained strong as occupiers seek well-connected premises while carefully managing costs. This trend is reflected in the Royal Docks, where we continue to see strong demand and rising rents across a portfolio of light industrial units, supported by limited supply and excellent transport connectivity.

Looking Ahead: Two Predictions for the Remainder of 2026

• Shorter Lease Terms Will Become More Common: As the market adapts to the upcoming rent review reforms, landlords and tenants are likely to continue to favour shorter lease terms that allow rents to be reassessed more regularly and reduce exposure to potentially onerous review mechanisms.
• Industrial Occupiers Will Seek Greater Certainty: With industrial rents continuing to rise, occupiers are expected to secure longer-term commitments in strategically important locations, while landlords will review portfolios to ensure rents remain aligned with market evidence.
• Business Rates Reform Will Become More Targeted: The Government is likely to focus future business rates measures more heavily on large distribution warehouses and multi-national operators, with increasing pressure to refine the current approach and better target those most able to absorb additional costs. 

2026 Mid-Year Insights

• Buyers Have More Negotiating Power Than Ever: One of the defining features of the market in 2026 has been the increased leverage buyers now hold. Across London, available stock has risen while buyer demand has softened, creating greater choice and less urgency amongst purchasers. As affordability remains stretched and borrowing costs remain elevated, buyers are becoming increasingly selective, and negotiations have become more challenging. We have also seen the growing influence of AI tools during the offer process, with buyers presenting increasingly detailed negotiations and raising points that would previously have been unlikely to form part of discussions. The result is a market where sellers need to be realistic on pricing and expectations, while agents are required to work harder than ever to keep transactions moving towards exchange.
• Overpricing Continues to Hold the Market Back: With instruction levels remaining relatively low, competition amongst agents to win listings has intensified. In many cases, this has led to properties being brought to market at unrealistic price levels, creating a growing number of homes that become stale and struggle to attract serious buyers. We have seen first-hand the impact this can have. Earlier this year, we valued a property in Walthamstow at £875,000 based on market evidence. Another agent secured the instruction at £950,000 despite limited comparable support. Five months later, the property remains unsold and the owners have lost the onward purchase they had hoped to secure. Stories like this highlight the importance of evidence-based pricing in today's market. Whilst overpricing may win instructions, it often reduces the likelihood of achieving a successful sale.
• Mortgage Rates Continue to Shape Demand: Although interest rates have stabilised, mortgage rates remain significantly higher than the levels buyers became accustomed to between 2020 and 2022. As a result, affordability calculations remain restrictive and many buyers are unable to borrow at the levels they could have achieved in previous years. This has created a growing cohort of buyers who are taking a "wait and see" approach, delaying decisions in the hope of improved affordability and greater economic certainty. We are seeing this play out in the market today. On Roding Road, Hackney, a comparable property in poorer condition sold for over £950,000 last year. Despite marketing a stronger property at £925,000, achieving a sale has proved challenging as buyers remain cautious and lending constraints continue to influence purchasing decisions.

Looking Ahead: Two Predictions for the Remainder of 2026

• Market Activity Will Increase After the Summer: We expect buyer activity to pick up following the summer holiday period, with September likely to be one of the busiest months of the year for agreed sales. Many buyers who have delayed moving decisions during the first half of the year are expected to return to the market, increasing transaction volumes. However, we do not anticipate this renewed activity translating into significant house price growth. Instead, it is likely to result in more deals being agreed at realistic market values.
• Confidence Could Begin to Return: The second half of the year may also see an improvement in market sentiment as buyers and sellers gain greater clarity around government policy and the wider economic outlook. Potential reforms relating to stamp duty and taxation, alongside the stability offered by a new Prime Minister, could encourage some of those who have been sitting on the sidelines to move forward with their plans. Whilst this is unlikely to transform the market overnight, it could provide a welcome boost to confidence and support transaction levels through the remainder of 2026.

2026 Mid-Year Insights 

• Increased Capacity Drove Competition: The most notable trend during the first half of the year was the continued influx of capacity across the property insurance market. Insurers demonstrated a strong appetite for growth, resulting in increased competition and improved outcomes for many property owners. On average, property insurance rates fell by around 10% during the first 6 months of 2026, with insurers frequently offering broader policy coverage and, in some cases, three-year long-term agreements for well-performing risks. For clients able to demonstrate strong risk management and a positive claims history, market conditions remained favourable.
• Risk Quality Became a Key Differentiator: Whilst pricing remained competitive, underwriting decisions were increasingly driven by the quality of risk management rather than simply the type of property being insured. Insurers placed greater emphasis on governance, ESG initiatives, climate resilience measures and historical claims performance when assessing risks. Property owners that demonstrated robust fire protection, water management controls and cyber resilience were typically achieving the most favourable terms. At the same time, insurers continued to scrutinise catastrophe exposures and maintained a heightened focus on secondary perils such as flooding, storm damage and wider climate-related risks. Although the claims environment remained relatively stable, underwriters continued to take a cautious approach towards higher-hazard or poorly managed properties.
• Underinsurance and Data Accuracy Remained in Focus: Despite softer market conditions, underinsurance remained one of the most significant concerns across the property sector. Many buildings continued to be insured using valuations that had not been professionally reviewed for several years, creating the potential for significant shortfalls in cover. As a result, insurers placed greater scrutiny on rebuild cost assessments and property valuations. Property owners continued to prioritise regular Reinstatement Cost Assessments (RCAs), with reviews typically recommended every three years to ensure rebuilding values remain accurate. Alongside this, insurers were increasingly using AI and more granular risk data to assess exposures, enabling underwriters to make more informed decisions around pricing, coverage and risk selection. There was also growing pressure on managing agents and insurers to provide greater transparency around commissions and fees, particularly for residential blocks and mixed-use developments.

Looking Ahead: Two Predictions for the Remainder of 2026 

• Soft Market Conditions Will Continue: Competitive market conditions are expected to persist throughout the reminder of 2026, particularly for well-managed commercial and residential property risks. Strong insurer appetite and abundant capacity should continue to support favourable pricing and broad coverage options for property owners who can demonstrate effective risk management and resilience measures.
• Greater Focus on Underinsurance and AI-Driven Underwriting: As insurers continue to refine their underwriting models, we expect an increased focus on rebuild cost accuracy and underinsurance risks. The use of AI and enhanced property data will become increasingly central to underwriting decisions, allowing insurers to assess exposures with greater precision while placing additional emphasis on accurate valuations and risk transparency.

2026 Mid-Year Insights 

• Housebuilding Remains Under Significant Pressure: The slowdown in residential development activity continues to be one of the defining themes of 2026. London has seen only around 6,000 private sector housing starts over the past year, significantly below the mayor’s target of 88,000 homes annually. However, there are some positive signs within the affordable housing sector. In the three months to the end of June, 1,070 GLA-backed affordable homes were started across London, compared to 347 during the same period last year. This demonstrates the increasingly important role affordable housing providers are playing in maintaining delivery levels as private sector development slows. The government has a 10 year, £39bn Social and Affordable Homes Programme. In late August 2026, it was announced that nearly £10 billion of allocations would help build 70,000 homes outside London, with 60% for social rent. London will get another £6bn, to be allocated in the future. Importantly, housebuilder Vistry Group has been awarded £350m, which has provided a boost to the beleaguered developer who is a major partner in delivering affordable housing. Despite the above boost in funding, viability pressures continue to affect the market.
• The New-Build Apartment Market Remains Challenging: Sales rates for new-build flats across London remain subdued, even on high-quality developments. Affordability constraints, higher mortgage costs and changing buyer preferences have all contributed to weaker demand, while a growing gap has emerged between asking prices and the prices buyers are willing to pay. Our market-facing intelligence suggests that purchasers are increasingly negotiating significant discounts, despite this not always being reflected in publicly reported sales performance. One-bedroom flats have been particularly affected, with fewer first-time buyers entering the market and reduced affordability impacting demand across both the new-build and second-hand sectors. Additional factors such as rising service charges and uncertainty surrounding future tenure reforms have also reduced buyer appetite for apartment living. However, there are notable exceptions. Strettons advised on market values across Fish Island, where demand for homes has remained strong across the development, with units selling well despite wider market challenges. The exception has been one-bedroom apartments, which continue to reflect the broader market trend of weaker demand from first-time buyers.
• Quality, Affordability and Place-Making Continue to Drive Demand: Whilst the wider market remains challenging, schemes that combine strong design, affordability and a clear sense of place continue to attract buyers. A good example is Monarch Rise in Layer-de-la-Haye, where Park Properties Housing Association has delivered 24 affordable homes as part of a 70-home development secured through a Section 106 agreement. Strettons provided market valuation advice for the homes at Monarch Rise, helping to inform a pricing strategy that reflected local demand and market conditions. Drawing on our extensive experience across Colchester and the surrounding area, we were able to provide accurate values that supported a successful sales launch. The scheme demonstrates how affordable housing can successfully combine high-quality design, premium specification and accessibility to homeownership. Demand has been particularly strong, with all homes sold off-plan and 80% purchased by first-time buyers. Shared ownership buyers secured an average 48% share, highlighting the continued importance of affordable homeownership products in helping people access the housing market. The success of developments such as Monarch Rise demonstrates that whilst affordability remains a challenge, there is still strong demand for high-quality homes that meet the needs and aspirations of local communities.

Looking Ahead: Two Predictions for the Remainder of 2026 

• Shared Ownership Demand Will Remain Strong: Despite wider market challenges, we expect demand for good-quality shared ownership housing, particularly family homes outside major urban centres, to remain resilient. Affordability pressures and the ongoing imbalance between housing supply and demand continue to make shared ownership an important route into homeownership for many buyers. The sector could receive a further boost if eligibility income caps are reviewed, indexed or adjusted to better reflect local house prices, allowing more households to access affordable housing products. Developments such as Monarch Rise demonstrate that when affordable housing is well-designed, well-located and aligned with local demand, buyer appetite remains strong.
• Market Recovery Will Depend on Improving Economic Conditions: The wider development market is unlikely to see a significant recovery until financial and economic conditions become more favourable. Many commentators continue to anticipate lower interest rates over the coming years, while easing inflation and improved global economic stability could help restore confidence across both the development and housing markets. If these factors are accompanied by supportive government intervention, developers may be better positioned to bring forward stalled schemes and improve overall delivery levels. Whilst challenges are expected to remain throughout the near term, the foundations for a gradual recovery could begin to emerge as market confidence improves.
• Policy Reform Could Become a Major Driver of Change: We expect housing delivery to remain high on the Government's agenda, with increasing pressure to introduce reforms that support both affordable housing and private sector development. Meaningful reform is unlikely to deliver immediate results, but we anticipate a stronger focus on growth and housing delivery over the coming years. By the end of 2027, the conversation may increasingly shift from the challenges currently facing the sector towards the opportunities created by any new policy framework.