Harcourt Lane Advisory

H1 2026 Sector Review Commercial Property

From the Partners

The first half of 2026 confirmed what precision investors have been positioning for since Q3 2024: sector bifurcation is not a temporary adjustment. It is a structural repricing of risk against income resilience, and it has further to run.

Industrial and logistics outperformed on every metric that matters for long-term hold strategies. Central London offices tightened significantly for well-specified, ESG-credentialled stock — and continued to widen for anything built before 2015 and not comprehensively refurbished. High street retail is more nuanced than the current consensus suggests, but the nuance does not change the investment case.

These are not conditions that reward broad sector exposure. They reward precision in asset selection, in covenant quality, and in timing. The briefing below sets out our reading of where each sector stands, and what we believe the second half of the year holds.

James Forsythe & Catherine Ellard

Partners, Harcourt Lane Advisory

"The gap between the best assets and the rest is wider than at any point since 2012. It has not stopped widening."

Prime Net Initial Yield

UK Commercial Property by Sector

Q2 2026  —  Lower yield reflects higher demand and tighter pricing

Industrial & Logistics

4.2%

Central London Office

4.8%

Retail Warehouse

5.4%

Mixed Use

5.8%

High Street Retail

6.4%

Source: Harcourt Lane Advisory market research, Q2 2026. Prime assets only.

Transaction Note  ·  HL/2026/047

Deal Data Long Acre, WC2 Central London Office Area 97,000 sq ft Net Initial Yield 4.6% WAULT 7.2 years Acquired May 2026

Advisory Note The first significant WC2 acquisition in our network since Q3 2024. The vendor settled at 4.6% net initial yield — a 40 basis point compression from equivalent transactions in Q4 of last year. A 7.2-year WAULT with a strong occupier covenant at this yield point reflects the repricing we have been tracking in well-specified City fringe stock for twelve months. Three comparable assets in EC1 and EC2 are under active review.

Sector Read  ·  H2 Outlook

Central London Office — Supply Is the Story Grade A availability in the City of London is now at its lowest level since 2006. Occupiers who deferred decisions in 2024 are re-entering the market simultaneously, and speculative completions have not kept pace. If supply stays constrained through Q3, prime rents have room to move in well-located sub-100,000 sq ft stock — which is where the transaction evidence is thinnest and the upside is least priced in.

Industrial & Logistics — Vacancy at Cycle Lows The South East logistics corridor between Heathrow and the M25 southern arc continues to produce the strongest occupier demand in the UK. Vacancy for units over 100,000 sq ft stands at 2.3%. Speculative development has not kept pace with take-up, and the forward pipeline for 2027 deliveries is the thinnest it has been in six years. Asset values are reflecting this — and in our view, have further to reflect it.

Direct Conversations

If you are considering a position in any of the sectors we cover, the right next step is a direct conversation.

We work selectively with private investors, family offices, and institutions at the point where market intelligence and specific mandates intersect. Engagements are confidential and on a direct advisory basis.

Speak with the Partners

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This briefing is issued for information purposes only and does not constitute investment advice. Past performance is not a guide to future returns. You are receiving this as a registered contact of Harcourt Lane Advisory. Harcourt Lane Advisory Ltd is registered in England & Wales. © 2026 Harcourt Lane Advisory. All rights reserved.