September 2026

Commercial property is not facing one single challenge in 2026. It is facing several pressures at once: selective occupier demand, higher operating expectations, financing uncertainty, rising obsolescence risk and the continuing cost of vacant space.

For landlords, asset managers and managing agents, the implication is clear. Portfolio strategy can no longer begin when a lease ends or a building becomes empty. The strongest decisions are increasingly made earlier; when there is still time to protect income, direct capital effectively and retain optionality.

Here are five of the biggest challenges facing commercial property right now.

Occupier demand is improving

The market is not moving uniformly. According to RICS’ Q2 2026 UK Commercial Property Monitor, the national occupier-demand picture improved but remained slightly negative overall. Industrial demand returned to positive territory, office demand was broadly flat and retail continued to lag. London also outperformed many other UK markets. RICS UK Commercial Property Monitor, Q2 2026

That matters because broad market sentiment is becoming less useful as a guide to individual asset performance. Two properties in the same sector can face very different outcomes depending on location, energy performance, building quality, amenity, access and the flexibility of the offer.

For office landlords in particular, hybrid working remains part of the backdrop. The Office for National Statistics found that 28% of working adults in Great Britain were hybrid workers in early 2025. ONS: Who has access to hybrid work in Great Britain? The office has not disappeared, but occupiers are asking more of the space they retain. They are more likely to consider whether it supports collaboration, staff experience, operational efficiency and their wider brand.

The challenge for property teams is to avoid treating every vacancy or lease event as a standard letting exercise. The better question is: what is the occupier proposition for this specific asset, in this specific market, today?

The gap between compliant and competitive buildings is widening

Meeting minimum requirements is essential, but it is no longer enough to guarantee market relevance.

In England and Wales, non-domestic private rented property generally requires an EPC rating of E or above before it can be let, unless a valid exemption has been registered. The requirement has applied to all privately rented non-domestic properties since April 2023. GOV.UK: non-domestic MEES landlord guidance

However, an asset can be technically compliant while still falling behind the market. Occupiers increasingly look beyond the EPC rating to consider day-to-day energy costs, quality of internal space, connectivity, ventilation, access, amenities and the overall experience of using a building.

This creates a capital-allocation challenge. Landlords need to decide where improvements will genuinely improve leasing prospects or protect long-term value, and where incremental investment may simply defer a more fundamental decision about repositioning, repurposing or disposal.

A useful starting point is to separate the portfolio into three broad groups:

• Assets that are already competitive and need to stay that way.
• Assets where targeted investment could materially improve performance.
• Assets where the current proposition is unlikely to remain viable without a more substantial change in strategy.

That assessment should happen before a lease event, not after it.

Financing and economic uncertainty are making timing more important

The cost of debt and wider economic uncertainty continue to influence commercial-property decisions. In July 2026, the Bank of England held Bank Rate at 3.75%, noting that higher energy prices and uncertainty continued to affect the outlook, while business investment was expected to soften as confidence and borrowing costs weighed on intentions. Bank of England Monetary Policy Report, July 2026

For property owners, this affects more than transaction volumes. It changes the decision-making environment around refurbishment, redevelopment, incentives and the timing of investment.

The risk is that uncertainty encourages inactivity. But delaying a decision can itself become expensive, particularly where a property is losing occupier relevance or moving towards vacancy. The aim is not to invest for the sake of it; it is to establish a clear commercial case for each decision.

That means testing proposed investment against practical questions:

• Will it improve tenant retention or leasing velocity?
• Does it reduce future compliance or operational risk?
• Does it make the asset more resilient to changing occupier demand?
• Is the alternative—doing nothing—more costly over the next 12 to 24 months?

In a more cautious market, the quality of the decision often matters more than the speed of the decision. But having the analysis ready early gives owners more control over timing.

Vacancy remains a major cost and strategic risk

Vacancy is often discussed as a loss of rent. In reality, it is a wider business event with costs that can include rates, utilities, insurance, security, maintenance, compliance activity, dilapidations exposure and a loss of market momentum.

For most empty commercial properties in England, empty-property relief lasts for three months. Industrial premises can receive a further three months, while certain properties may qualify for longer exemptions or other reliefs depending on their circumstances. Once standard relief ends, most owners are liable for full business rates. GOV.UK: empty-property relief

The 2026 revaluation has also made it important to ensure that rateable-value and liability assumptions are current. New rateable values took effect on 1 April 2026, and the business-rates regime now uses different multipliers according to rateable value and, in some cases, property use. GOV.UK: estimate your business rates

This is why empty-rates planning should not begin on the date a property becomes vacant. By then, valuable time may already have been lost.

A stronger approach begins six to eighteen months ahead of a potential void and asks:

• Is the likely vacancy date understood?
• Has the preferred asset strategy been agreed?
• Are rates, property condition and documentary evidence being reviewed early enough?
• Is a refurbishment or alternative-use strategy being planned around realistic timing?
• Are asset management, property management, finance and leasing teams working to the same timetable?

Every property is different, and relief or exemption eligibility depends on the facts. But early review creates more options than a reactive approach.

Obsolescence is no longer a distant problem

Perhaps the most significant challenge is the risk that a building becomes less relevant before it becomes physically unusable.

Obsolescence can be driven by energy performance, layout, location, connectivity, access, outdated services, weak amenity provision or a mismatch between the property’s current use and local demand. It is rarely caused by one factor alone.

The commercial-property market is increasingly rewarding assets that can adapt. That does not mean every building needs to become flexible workspace or mixed-use space. It means owners need a credible answer to a simple question: what role can this asset play in its local market over the next five to ten years?

For some properties, the answer will be reinvestment and repositioning. For others, it may be a change of use, a partial redevelopment, a different leasing strategy or a planned exit.

The difficult part is that these choices require cross-functional thinking. Asset strategy, leasing, sustainability, finance, building operations and business rates cannot be addressed independently if the goal is to protect long-term value.

Looking ahead

The future of commercial property will not be determined by a single national trend. It will be shaped asset by asset, market by market and decision by decision.

The portfolios best placed for the year ahead are likely to be those that understand their exposure early: upcoming lease events, occupier expectations, capital needs, empty-rates liability and the practical actions required to remain competitive.

The key is to move from reacting to vacancy to planning for it.

At Verity, we work with landlords, asset managers and managing agents to bring greater clarity to vacant-property exposure and empty-rates strategy. If you would like to discuss an upcoming void, a portfolio review or the potential costs within your current asset plan, we would be pleased to hear from you.

Vacancy is a normal part of the commercial property lifecycle, but it doesn’t have to result in unnecessary costs.

Understanding how empty property rates work is the first step towards making informed decisions about your property and protecting your investment. By planning ahead and exploring available options early, property owners can often reduce the financial impact of prolonged vacancy while keeping assets secure, compliant, and ready for future occupation.

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veritygroup.uk

This article is a general market overview, current as of September 2026. It is not property, legal, financial or tax advice. Business rates rules and relief eligibility vary by jurisdiction and individual circumstances.