Commercial Landlords Eye Growth Opportunities Outside of London: A Shift in Strategy Across the UK
For decades, London has been the beating heart of the UK’s commercial property market. High-profile developments, international investments, and premium rents have all made the capital a magnet for commercial landlords.
However, a growing number of landlords are now turning their attention to the regions beyond the M25, identifying lucrative opportunities in emerging hubs throughout England, Wales, and Scotland.
This strategic shift is being driven by a combination of economic recalibration, decentralisation of business, infrastructure investments, and changes in occupier demands.
As a result, commercial landlords are rethinking their portfolios, looking to tap into rising demand and more sustainable yields outside London.
The Changing Landscape of UK Commercial Property
The UK’s commercial property market is transforming. Several factors have contributed to the momentum shifting from London to other UK regions:
Regional Economic Growth
Cities like Manchester, Leeds, Birmingham, Bristol, and Glasgow have seen steady economic expansion supported by local enterprise partnerships, foreign investment, and strong university networks. This growth translates into greater demand for office, retail, and industrial spaces.
Government Support and Investment
Initiatives such as the Levelling Up Agenda have channelled government funds into regional infrastructure, transport, and regeneration projects. From HS2 to Northern Powerhouse Rail, these improvements are enhancing accessibility and economic viability across the country.
Post-Pandemic Business Models
Remote and hybrid working patterns have diminished the appeal of central London office locations for many firms. Businesses are increasingly decentralising operations, setting up regional headquarters or opting for flex spaces in more affordable cities.
More Attractive Yields Outside London
London’s sky-high property prices often mean slimmer yields. In contrast, cities like Newcastle or Nottingham offer lower entry costs and higher rental returns, making them attractive from a landlord’s investment perspective.
Key Growth Sectors Driving Demand in the Regions
Outside London, commercial landlords are tapping into specific sectors that are witnessing increased demand:
- Industrial and Logistics
- The growth of e-commerce has turbocharged the demand for distribution hubs and last-mile delivery centres. Cities along the M1 corridor, such as Leicester and Northampton, are benefiting immensely.
- Life Sciences and Tech
- Oxford, Cambridge, and Edinburgh are experiencing a boom in demand for lab space and tech incubators, thanks to their university ecosystems and innovation clusters.
- Healthcare and Senior Living
- An ageing population is fuelling demand for medical facilities, care homes, and associated infrastructure in areas with demographic needs, especially in semi-rural and suburban locations.
- Creative and Media Industries
- Cities like Manchester and Cardiff are becoming media powerhouses, attracting broadcasters and content creators in need of modern studios and collaborative office spaces.
Case Studies: Where Landlords Are Investing
Manchester
With its thriving financial district and MediaCityUK development, Manchester is a top regional pick. Office take-up remains strong, with flexible and Grade A spaces in high demand.
Leeds
Leeds has emerged as a legal and professional services hub. The South Bank regeneration has opened new investment zones for office and retail landlords.
Birmingham
With HS2’s arrival on the horizon, commercial landlords are eyeing long-term gains from Birmingham’s improved connectivity and increasing business presence.
Bristol
Tech startups and green energy firms are driving office and mixed-use development demand in the South West, particularly in Bristol’s Temple Quarter.
Risks and Considerations
While the opportunities are promising, moving beyond London isn’t without its challenges:
Local Market Knowledge: Every region has distinct planning rules, tenant behaviours, and economic drivers. Landlords must undertake deep due diligence before expanding.
Property Management Complexity: Managing assets across dispersed locations can lead to operational inefficiencies if not properly structured.
Political and Planning Uncertainty: Local councils vary in their approach to planning permission and business support, requiring careful navigation.
Tenant Stability: Some regions may have a narrower range of quality tenants, increasing the risk of voids or rent arrears without diversified leasing strategies.
A Balanced Portfolio Approach
Increasingly, commercial landlords are adopting a portfolio diversification strategy—retaining flagship properties in London while expanding into high-potential regions. This approach not only spreads risk but also provides access to different rental cycles and demand drivers.
For example, a landlord with traditional office space in central London may now also own a logistics warehouse in the Midlands and a tech-focused office in Reading or Bristol.
This balancing act enables them to remain competitive in a fluctuating economy while tapping into varied growth trends.
Final Thoughts
The commercial property narrative in the UK is evolving. London, while still a powerhouse, no longer holds a monopoly on opportunity. With changing business needs, government initiatives, and regional growth, landlords who adapt and diversify geographically are likely to benefit the most.
The UK’s “second cities” and emerging regional hubs are no longer playing second fiddle—they are rising stars in their own right, and commercial landlords are taking note.
Frequently Asked Questions (FAQs)
Why are commercial landlords moving away from London?
Many are seeking higher yields, more affordable assets, and greater growth potential in regional cities, driven by changes in occupier demand and government investment.
What cities are seeing the most growth for commercial property outside London?
Manchester, Leeds, Birmingham, Bristol, and Glasgow are among the leading cities for commercial investment due to their infrastructure, business ecosystems, and demand for space.
What sectors are driving commercial demand in the regions?
Key sectors include logistics, tech, life sciences, healthcare, and media. These industries are increasingly concentrated in regional clusters.
Are yields better outside of London?
Yes, regional yields are often higher due to lower capital values and increasing tenant demand, offering potentially better returns for landlords.
What are the risks of investing outside London?
Challenges include understanding local markets, navigating planning policies, managing dispersed portfolios, and ensuring tenant quality.
Is London still a good place to invest in commercial property?
Yes, but competition is fierce and returns may be lower. Many landlords retain London holdings for prestige while expanding elsewhere for growth.
How can landlords manage a regional portfolio effectively?
They can partner with local property managers, use digital asset management tools, and adopt flexible leasing strategies tailored to local markets.
What kind of commercial spaces are in highest demand outside London?
Industrial units, tech-focused office spaces, life science labs, and healthcare facilities are currently in high demand across various UK regions.
Will regional investment continue to grow in the next decade?
With sustained infrastructure investment and ongoing business decentralisation, regional growth is expected to continue, making long-term investment attractive.
How do I identify the right regional city to invest in?
Start by analysing economic growth trends, infrastructure projects, sectoral strengths, and tenant demand in different cities before committing capital.
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