Why investors are giving retail property a second look – Thompson

From the steady rise of online shopping to repeated warnings about declining high streets, the sector has often been portrayed as one permanently accompanied by the sound of alarm bells.

However, the reality is not quite as straightforward as it might first appear. From my perspective, speaking regularly with brokers firmly ensconced in this space, what we are seeing now is less a retreat from a sector supposedly on the brink and more a reassessment of how these assets can actually be used.

Recent data from Rightmove illustrates this quite clearly. According to its Commercial Insights Tracker, demand to lease retail property fell by 4% year-on-year in the final quarter of 2025, yet demand to invest in retail assets rose by 3% over the same period.

At first glance, that contrast might appear slightly contradictory. But in practice, it reflects something that many brokers have been discussing for some time.

While traditional retail leasing demand has softened in certain locations, investors have not necessarily lost faith in the buildings themselves. If anything, many of the conversations I have had recently suggest the opposite.

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What we are seeing instead is investors approaching retail assets with a repositioning mindset, looking at buildings and asking not what they used to be, but what they might become. Perhaps those alarm bells that have been ringing for the past decade were not warning of the end of retail property at all, but simply urging investors to rethink it.

Evolution, not decline

For me, the focus has moved away from prime high street units with long-established tenants and towards properties that might previously have been overlooked. Underperforming retail parades, large single units and buildings with underutilised upper floors are now attracting renewed interest and, in many cases, a genuine second lease of life.

And in fairness, once you begin looking at those assets through the lens of refurbishment or a mixed-use conversion, the investment case can start to look rather more convincing.

What might once have been written off as a tired corner of the high street can suddenly look less like a problem property and more like a repositioning project with real potential.

Part of the reason for this is simply that the high street itself has been changing for years. Retail space in many towns and cities is no longer dominated exclusively by shops selling goods. Service-led businesses, hospitality operators, leisure venues and health-focused occupiers are increasingly shaping the mix of tenants occupying these spaces.

In other words, the high street is not disappearing – it is just becoming something different from what many of us grew up with.

Policy changes may also encourage this kind of reassessment. From April 2026, reforms to the business rates system will introduce new multipliers, including lower rates for retail, hospitality and leisure properties below £500,000 in rateable value and a higher multiplier for larger premises.

The changes are designed to rebalance the tax burden across the property market and may prompt some investors to reconsider how certain assets are positioned or used.

Changes to the tax environment have a habit of prompting investors to review their portfolios too. In some cases, that leads to refurbishment projects designed to attract new occupiers. In others, it encourages a broader rethink about how a building might be reconfigured or repositioned. Either way, it tends to get people looking at assets with fresh eyes, which is rarely a bad thing for market activity.

Of course, once those repositioning plans begin to take shape, transactions often become more involved. For brokers working in the commercial property market, this is typically the point where deals start to move beyond straightforward buy-to-hold financing structures.

An investor may acquire a property at a discounted price, undertake refurbishment works and then refinance once new tenants have been secured or the building has been reconfigured.

In other cases, the project might involve subdividing a large retail unit into several smaller spaces or converting upper floors into residential accommodation to create additional income streams, which is often where what once looked like a struggling retail asset starts to resemble something far more intriguing.

For all the discussion around the decline of retail property, the reality on the ground feels more balanced. Many high streets are not disappearing so much as adapting to a different economic environment and a different mix of occupiers.

And for investors who are prepared to look at those assets with fresh eyes, and for brokers helping them structure the right funding solutions, there may still be opportunities hiding in plain sight.