Offices are expected to attract the largest share of UK real estate investment in 2026, with up to £15bn deployed into the sector, according to new forecasts unveiled by JLL at the launch of its Property Perspectives 2026 report.
The firm predicts office transactions will account for around 35% of all UK property deals next year, driven by the return of core capital, improving debt conditions and expectations of a lower base rate. Central London is forecast to capture £10bn–12bn of this activity, with a further £3bn–5bn flowing into regional markets.
Speaking at the event in London, JLL’s team struck a cautiously optimistic tone about the year ahead. Opening the launch, UK chief executive and head of EMEA capital markets Matthew Richards said: “We live in a complex world. There is going to be noise in the system. And it’s all about how to play through that noise.” He added that the firm was “really confident that 2026 will be a better year for real estate than 2025”.
Nick Whitten, head of UK research and head of EMEA living research, said the market is entering a more constructive phase after several years of disruption: “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.”
JLL expects rising transaction volumes against what Whitten called “a solid macroeconomic backdrop”, with particular strength in offices and shopping centres, while logistics and rental housing will also see strong demand.
A record for retail
JLL expects regional office markets to continue to tighten. Bristol, Manchester, Edinburgh and Birmingham are all forecast to reach or exceed prime rents of £60 per sq ft by 2030, driven by what the firm describes as “extreme” supply constraints. Limited development pipelines in regional cities are expected to place sustained upward pressure on rents.
Retail is also tipped for a strong recovery. JLL forecasts that 2026 will be the best year for shopping centre investment in a decade, with prime yields expected to compress for only the second time since 2016. Physical retail is expected to outperform online sales growth, with an additional £34bn of spend forecast in stores compared with £29bn online over the next few years.
The industrial and logistics sector is set to remain a cornerstone of occupational demand. JLL forecasts big-box take-up of more than 25.5m sq ft in 2026, the highest level outside the pandemic boom years of 2020–2022. A decline in available supply could also support further rental growth.
However, the outlook for residential development remains challenging. JLL predicts new housing starts could fall to around 150,000 in 2026, underscoring the depth of the UK’s supply crisis. The firm said this could nevertheless mark the cyclical low point, with some recovery possible as planning reforms bed in, the £39bn Affordable Homes Programme is rolled out and forward-funding for build-to-rent gradually returns.
Defining factor
Hannah Dwyer, JLL’s head of EMEA work dynamics research, highlighted broader structural forces reshaping the market, including higher costs, supply shortages, technology and energy constraints. “Experience is now a key part of how people choose where to live, where to work, where to spend time. People don’t reject offices, shops and cities, but they do reject the poor experiences that they have in them,” she said.
She also pointed to the growing importance of energy infrastructure and AI in real estate decision-making: “Energy is now becoming a defining factor of real estate competitiveness.”
Beyond traditional sectors, JLL forecasts rapid expansion in regional data centre capacity, with the rest of the UK expected to reach 2.25GW of capacity – double that of London – as AI demand and government-backed growth zones drive development.
Clean energy infrastructure is also set for a major uplift. JLL expects a wave of new solar, wind and battery projects to come forward by 2030, supported by reforms to grid connections that prioritise projects that are “first-ready, first-connected”. By the end of the decade, up to 95% of UK electricity generation could come from renewable sources.
Whitten concluded that while risks remain, particularly around development viability and geopolitical uncertainty, the combination of easing inflation, stabilising interest rates and constrained supply across key sectors is laying the groundwork for renewed momentum in UK property markets.
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