Where capital meets concrete 2026: Sector trends and deal dynamics in UK real estate M&A
The UK corporate M&A market in 2025 demonstrated resilience tempered by caution, a pattern equally evident across corporate real estate transactions.
After a rollercoaster year marked by stubbornly high interest rates and geopolitical uncertainty, signs of optimism are returning. Inflation has been easing and forecasters predict the Bank of England base rates should be cut by a further 0.5% in the first half of 2026. This should hopefully improve financing conditions, potentially reviving deals that were shelved due to high borrowing costs. Both inbound and domestic investors are expected to seize opportunities; in Deloitte’s global survey published in September 2025, the UK ranks among one of the top targets for cross-border real estate investment heading into 2026, reflecting its appeal as a stable, well-regulated market even amid worldwide uncertainty.
Against this backdrop, we take a look at some of the key trends we expect to see in the corporate real estate market in 2026, together with some legal considerations that are increasingly impacting deals.
Sector Trends
Offices - Flight to Quality
After the pandemic-era slump, UK office assets are mounting a steady comeback. Occupier and investor interest in prime office space is rebounding, focused on future-proofed, sustainable workplaces. Employers are encouraging a return to in-person work, fuelling demand for high-quality, amenity-rich offices.
This flight to quality is evident in rising occupancy and record rents for top-tier green buildings: Grade A offices in core locations achieved record-high rents in 2025 amid fierce competition and limited new supply. In central London alone, it was reported that 21 office transactions over £100 million closed by mid-December 2025. Industry insiders observed that investors, especially domestic funds and institutions, continue to grow more confident returning to the office sector. As interest rates ease and stability starts to return, the office sector may be poised for a healthy year ahead.
Industrial and Logistics - Consolidation and Resilience
The “sheds” sector (industrial and logistics) remains a strong performer, underpinned by e-commerce growth and supply chain reconfiguration. Even amid broader investment lulls, 2025 activity in UK industrial/logistics real estate held up at near-record levels.
Private equity and institutional purchasers are driving consolidation as they seek to achieve scale and secure stable yields in this space. U.S. based firms in particular have been “snapping up” UK warehouse platforms. A notable example was Blackstone’s £489 million acquisition of Warehouse REIT, which topped a rival bid and took the London-listed company private. Well-located distribution centres with long-term, durable cash flows remain highly sought-after. Consequently, consolidation via M&A is expected to continue in 2026 as major players compete for scale.
Retail - Polarisation and Selective Recovery
The retail sector enters 2026 in a more stabilised, albeit polarised, position. According to CBRE’s UK Real Estate Market Outlook 2026, investor sentiment towards retail has improved modestly following several years of repricing.
Prime retail sites and well-located retail parks are expected to remain attractive to investors in the year ahead. By contrast, secondary and tertiary retail sites with weaker footfall are likely to continue to face challenges. As a result, it is expected local authorities and investors will continue to pursue mixed-use redevelopment strategies, incorporating residential and leisure uses into underperforming retail sites, with transaction activity increasingly focused on assets offering credible repurposing opportunities.
Hospitality - Renewed Optimism
The hospitality sector is entering 2026 with renewed optimism. International travel and tourism have rebounded and industry experts hope that there will be renewed deal activity in this area in the year ahead. While overall UK hotel investment did soften in 2025 (approximately £5 billion, down 15% from 2024) dealmakers remain upbeat about 2026.
Reports indicate that the final quarter of 2025 showed particular strength. Q4 hotel investment exceeded £2 billion, over 40% higher than Q4 2024, suggesting momentum is building. There is hope that domestic and international purchasers and investors will target hotels in the year ahead, drawn by their inflation-linked cash flows and the UK’s status as a leading tourism market.
Data Centres - Expansion Beyond Traditional Hubs
Data centres have firmly established themselves as a core real estate asset class. Fuelled by the digital economy and surging cloud and AI demand, they now attract substantial institutional and private capital. The traditional London centric footprint is expanding: while established clusters around West London and the M25 remain highly sought after, developers are increasingly pushing into adjacent and edge locations where grid capacity is more readily available and land is less constrained.
The UK Government is also seeking to support large scale data centre development through initiatives such as AI “growth zones”, including proposals in areas like Culham in Oxfordshire. Although the sector continues to grapple with power availability, planning hurdles and community impact concerns, the weight of capital targeting data centres suggests that transactional activity in this space is unlikely to slow in 2026.
Ongoing legal considerations
Regulatory
Corporate real estate transactions in 2026 will continue to be shaped by an evolving regulatory landscape. As an example, the National Security and Investment Act 2021 (NSIA) grants the UK Government extensive powers to review, and if necessary intervene in, acquisitions involving assets deemed sensitive from a national security perspective. Certain corporate real estate transactions can fall within scope where the underlying assets constitute, or support, critical infrastructure; data centres are a particular focus and may trigger mandatory notification under the NSIA. Failure to notify a notifiable transaction can result in significant penalties or render the transaction legally void. As a result, NSIA analysis is now routinely embedded into deal timelines, particularly for transactions involving data-heavy or strategically sensitive assets.
We also expect there to be a significant regulatory impact on corporate real estate transactions involving the residential and living sectors. The Building Safety Act 2022 will have an ongoing impact on acquisitions involving high-rise residential and living assets, as sellers and purchasers continue to navigate the impact of extensive building safety obligations that apply to those assets. In addition, the Renters’ Rights Act 2025 (RRA) will have a pervading impact on the structuring of deals in those asset classes. The major changes in the RRA will take effect in 1 May 2026, including the abolition of assured shorthold tenancies and no-fault evictions, which will require purchasers to undertake careful planning ahead of acquisition to ensure that their business plan can be implemented post-acquisition.
Structuring, Tax Efficiency and Operational Separation
Structuring considerations have always been central to corporate real estate M&A and will remain a key focus in the year ahead. Tax, corporate and commercial issues are closely intertwined, particularly around Stamp Duty Land Tax, VAT grouping, intra group transfers, historic cost sharing and the allocation of employee, pension and operational liabilities on separation (especially on hotel and living deals). Purchasers and investors are therefore placing greater emphasis on early structuring analysis, ensuring that the transaction is not only executable on day one, but also provides sufficient flexibility for portfolio re configuration and exit further down the line.
Conclusion
All told, the UK corporate real estate market enters 2026 with a cautious but genuine sense of opportunity. The foundations for a pickup in deal activity are in place: financing markets are stabilising and there is renewed interest in sectors such as offices and hospitality.
Against this backdrop, legal execution will matter as much as ever. Structuring, tax efficiency, regulatory analysis and disciplined risk allocation will remain central to getting deals over the line. If current market signals continue to strengthen, we hope for an uptick in corporate real estate deals in 2026 driven by improved confidence, but firmly informed by the lessons of the past few years.
