A new commercial property report highlights a mixed but resilient picture across the Midlands in 2025, with strong investment growth in the West Midlands, alongside increased levels of take-up in some key sectors in the East Midlands.
According to the Market Insite 2026 report, compiled by leading commercial property agent Innes England, commercial property investment performance diverged across the region last year.
In the West Midlands, total investment volumes surged by 55% year-on-year to £2.8bn, outperforming the national market for the first time in three years. Meanwhile, total investment volumes across the East Midlands stood at just under £1.2bn in 2025, following a strong 2024 in which investment had broken through the £2bn mark.
Overall, prime yields remained stable across all main sectors throughout last year. Office investment activity gained momentum in both regions, while the living sector continued to perform well in the East Midlands, where investment activity increased by nearly 60% year-on-year.
However, the Market Insite 2026 report notes that industrial investment activity across Nottingham, Leicester and Derby fell to just under £600m, partly as a result of limited stock availability following a year of significant out-performance. In the West Midlands, industrial property continued to account for the largest share of total investment activity.
Ben Robinson, Innes England’s head of investment, told audiences at the report’s regional launches: “We believe the pullback in activity, which was seen across the board of all three East Midlands cities, was largely down to a combination of a lack of available stock and the previous year’s out-performance, as investor appetite and sector fundamentals remain strong.”
About the West Midlands, Ben said: “We are optimistic as we head into 2026. With broadly resilient occupier markets and the cyclical factors that weigh on property markets continuing to recede, we expect to see a steady improvement in both investment volumes and values throughout the year.”
Other highlights from the Market Insite 2026 report included:
- The living sector recorded strong growth across the Midlands, with East Midlands investment totalling £243m, a near 60% increase, driven by activity in Derby and particularly Leicester
- Derby’s office sector saw its highest level of take-up for 12 years, including 81% in Grade B accommodation
- Nottingham’s offices recorded a 30% uplift in take-up, rising to 363,700 sq ft in 2025, while take-up of Grade A city centre stock increased by 190%
- Industrial rents grew by 45% for prime Grade A and 38% for Grade B over a five-year period in Leicester, with Derby also experiencing significant rental growth
- Nottingham’s industrial sector recorded its highest take-up since 2014, at 1.16m sq ft
- Derby’s industrial take-up remained above the 10-year average for the fifth consecutive year in 2025
- The retail and roadside sector saw continued growth in city centre bars and restaurants, alongside rising demand for convenience retailing and drive-to and drive-thru destinations
- Investment activity in the West Midlands broadened beyond industrial into office and living assets
- Investor interest in the West Midlands retail sector, let by out-of-town retail parks, totalled £861m and the town centre market benefitted from Hammerson’s purchase of a 50% share in shopping centre, The Bullring
Ben added about the East Midlands: “We expect investor appetite to return to the office sector as the resilient occupier market, relatively tight supply and attractive entry yields make a compelling investment case, as we are starting to see playing out across the UK’s ‘Big Six’ cities.”
The findings were unveiled at a series of Market Insite events held in Nottingham, Leicester, Birmingham and Derby, where guest speaker and leading economist Graeme Leach, CEO of Macronomics Consulting, shared his outlook on current market conditions.
Graeme warned of dangers in the UK’s outlook, cautioning that political risk could prove a ‘canary in the coal mine’.
Thankfully, he said, three ‘shock absorbers’ may have a protective effect upon the UK economy in 2026: deeper rate cuts, an acceleration in quantitative easing, and slack in the household savings ratio.
Graeme added: “Amid ongoing uncertainty in the British economic outlook, organisations are facing some of the most challenging conditions in recent memory.
“In times like these, it is more important than ever to get ahead – by planning proactively, investing wisely and positioning for long-term resilience rather than short-term reaction.”
Some of the biggest deals of last year across the Midlands featured in the Market Insite report included:
Offices:
- Nottingham: The largest deal of the year was the 31,170 sq ft letting to Arden University at Castle Meadow Campus; while See Tickets took 19,362 sq ft at The Hockley Pod on Fletcher Gate
- Leicester: A growing trend in the city centre is the repurposing of older office buildings, the largest in 2025 being the sale of Arnhem House, totalling 64,021 sq ft
- Derby: The largest transaction was the 29,300 sq ft disposal of St James House, Mansfield Road, to Derby City Council, while MHA acquired 23,000 sq ft at Wyvern Business Park
- West Midlands: After several quieter years, larger office transactions returned, led by Priory Real Estate’s £38m acquisition of Baskerville House in Birmingham city centre, reflecting a 9.8% net initial yield.
Industrial:
- Nottingham: The most significant transaction was the 145,723 sq ft letting of Power 146 on Thane Road to BDM Logistics, while Swedish engineering group ABB took 100,000 sq ft at Fairham Business Park
- Leicester: Two ‘big box’ deals completed – the 491,926 sq ft pre-let to Tesco at Mountpark, Hinckley, and the 277,260 sq ft letting of Optimus 277 at Junction 21A of the M1 to Accrol Group
- Derby: The largest transaction was the 195,000 sq ft build-to-suit facility at Infinity Park; a second big box deal was the 120,000 sq ft pre-let at SEGRO’s SmartParc Derby
- West Midlands: Royal London’s £197m off-market acquisition of the 1.65 million sq ft Fradley Park in Lichfield representing the region’s largest industrial transaction of the year
Innes England managing director Matt Hannah said: “Reviewing the data is always fascinating, and our in-person events are a valuable opportunity to explain the thinking behind the numbers.
“Data is everything in today’s business environment. Our Market Insite research reflects how the region and the commercial property market are responding to shifting economic conditions, changing occupier behaviour and investor priorities.”
