Bridging is key to unlocking the semi-commercial opportunity – Thukral

Whether it is a retail unit with flats above, a mixed-use parade or a building with clear refurbishment potential, these assets can offer more than one route to performance. Investor appetite is clearly there, particularly among those buying at auction.

Savills recently reported that while transactional volumes in the mainstream investment market rose by 13% year-on-year, activity in auction rooms accelerated much faster. Purely commercial transactions rose by 55% to £188m in 2025, while overall commercial and mixed-use sale volumes increased by 35% year-on-year to £320m.

The broader yield backdrop also helps explain why more investors are widening their search. Allsop’s Q1 2026 investment market update shows January 2026 yields of 6.75% for prime shops, 10% for secondary shops, 6.75% for major regional city offices, 7.5% for South East town offices and 11.5%-plus for secondary regional city offices.

For experienced investors willing to step beyond more straightforward residential stock, those potential returns are hard to ignore.

But what makes semi-commercial especially interesting is the ability to create value. That might mean refurbishing flats above a retail unit, re-letting vacant commercial space, improving Energy Performance Criteria (EPC) credentials or repositioning the asset ahead of a refinance. Allsop’s market update noted that ‘re-basing’ – redeveloping or repositioning property – is becoming more frequent, and that more assets are being sold with vacant possession to allow a comprehensive refurbishment and re-let programme.

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This is exactly why bridging finance has become such an important part of the conversation.

Bridging addresses challenges of semi-commercial property process

A lot of semi-commercial deals do not fit the criteria for mainstream term lending on day one.

The property may be bought at auction with a tight completion deadline. It may need works before it is mortgageable. It may include vacant units, short leases or a patchy income profile. For a conventional lender, that can be a reason to hesitate. For an experienced investor, it is often where the opportunity starts.

The challenge is being able to move quickly enough to secure it.

At auction, speed and certainty are everything. If the right lot comes up, the investor cannot afford to wait for a slow, inflexible lending process. They need to be able to act decisively, complete within deadline and then execute the business plan. That is where bridging proves its value.

According to Allsop, its first dedicated commercial auction of 2026 raised £40m through the sale of 52 lots at an 87% success rate, with mixed-use assets among the standout transactions. A town centre mixed-use investment in Maidstone sold for £2.55m at a 9.02% net initial yield (NIY), while a mixed-use parade in Liverpool sold for more than £2.8m at around a 10% NIY. Allsop also said the result reflected a “positive uptick in buyer sentiment”.

In these situations, bridging gives investors the breathing space to acquire the property, carry out works, stabilise the income, tidy up tenancy issues and move the asset into a position where it can be refinanced onto a longer-term facility. In that sense, it is not simply short-term funding for the sake of it.

It is often the funding tool that allows the investor to unlock the opportunity in the first place.

For intermediaries, there is a clear message here. When a client is looking at a semi-commercial purchase, particularly one at auction or one that needs refurbishment, the conversation cannot just be about headline pricing. It has to be about structure, timescales, exit and whether the lender genuinely understands the asset and the borrower’s plan for it. There is an opportunity cost to delay, and working with the wrong lender could mean missing out on the deal altogether.

Investors are drawn to semi-commercial property because it can offer stronger income, multiple exit routes and the chance to create value through active management. Intermediaries should be paying attention because the funding requirement is often more nuanced, and the advice piece matters more.

In this part of the market, having the right finance in place is not just helpful. It can be the difference between spotting the opportunity and actually securing it.