25 for ’25: Industry leaders deliver their predictions for the year ahead. Part four

Principal, Addington Capital 

2025 is a difficult year to call. While the occupational market remains tight in residential and offices, which bodes well for rental growth, the hoped for fall in interest rates is likely to disappoint given the current government’s economic policy and increase in borrowing. Another headwind is a growth in regulation particularly in the areas of energy and climate change, which will increase costs and inhibit growth.

The upside for businesses depends heavily on improved productivity through finding efficiencies and through AI, although as yet both remain unproven. The next four and a half years will be tough. As usual, the Labour government will overregulate – good for the professionals advising on this, but bad for business and for economic growth.

Michael Dean

Director and co-founder, Avamore Capital

The year 2025 is likely to present significant challenges for commercial occupiers as the increased tax burden imposed by the government puts additional pressure on businesses. This environment will naturally suppress occupational demand, with many companies opting to downsize rather than expand as they navigate rising costs and economic uncertainty.

However, there is a potential silver lining for office spaces that cater to startups and SMEs. Historically, periods of economic strain and redundancies have catalysed entrepreneurial activity. Redundancy packages often provide a financial foundation for senior executives to launch new ventures, creating demand for flexible, well-located office space tailored to these fledgling businesses.

Landlords who adapt to these shifts by offering affordable, scalable solutions with strong community and amenity offerings may find opportunities in what might otherwise seem like a challenging market. While the broader sector feels the strain, a niche focus on agility and innovation could offer resilience.

Liz Peace

Adviser on property, politics and the built environment

Predictions used to be quite good fun when there was at least some chance of some of them being vaguely right. But we live in such uncertain times that I’d rather talk about  what I would really like to see happen in 2025 than the likelihood of certain things happening.

So, my  really big hope for the year is that at last we see a major rationalisation and re-organisation of how our wonderful industry represents itself. I was hugely encouraged to see that BPF, IPF and AREF were looking seriously at sone form of consolidation. If we could throw in BCO and REEVO and all the resources – finance and people – that they control then we would have the basis for a great advocacy organisation that could begin to shift the dial in terms of both government and wider stakeholder understanding and appreciation of what we do. The time wasn’t right for this in the noughties – but 2025 could be the year!

Graham Sturge

CEO, RED Construction Group

For people in construction, it is easy to feel anxious about what 2025 might have in store. Despite outputs heading back to pre-Covid levels, we have yet to feel the full impact of Brexit. That, alongside the cash-tight market and lack of inflationary pay increase for trade labour, could combine to create cost pressures that should be planned for now. However, there is still plenty to look forward to, with widespread revamping of current unsustainable procedures and a more collaborative approach to resolution.

From our perspective, we expect sustainable growth, having just celebrated a record-breaking year of turnover. A real aim has been to support the supply chain, impacted by insolvencies but often forgotten about, and that’s where we want to continue adding value. It’s key we remain mindful of the less than optimal market conditions, but we’re anticipating a ‘new norm’ by Q4 for construction, bringing with it stability, an exciting word in our industry.

Paul Sargent,

Founder, Queensberry Real Estate

For the first time I struggle to predict the New Year.

Since Brexit and Covid 19, there has been insufficient cyclical data to accurately assist decision making on economic, investment and consumer trends. No one really knows for sure. We continue to uncover the ‘new normal’ daily in both our personal and professional lives.

I do believe agile entrepreneurial companies such as Queensberry will be best placed to evolve in such an environment as it will be key to have multi-sector experience and the ability to make quick decisions.

However, for widespread recovery of the property sector, we need greater unity. It is the success and combined strength of all operators within a sector that create an attractive marketplace. We need to engage more openly with our peers, identifying and addressing the common challenges we face, to collaboratively reestablish UK plc as a viable investment opportunity on the global stage.

Matt Watts

Managing director, LABS

In 2025, hybrid work will be the standard, with businesses embracing flexibility to attract and retain talent. The traditional 9-5 workday will become less common, with employees working when and where it suits them best. Workplace design will shift its focus from desk spaces to collaboration zones, with an emphasis on quality. Sustainability will remain a key priority, with companies adopting certifications like BREEAM and WELL, and using smart tech to improve efficiency.

Technology will enable seamless work experiences, whether remotely or in-person, with smartphones serving as keys to offices and tools for booking desks. Wellbeing will also be a top priority, with workspaces designed to support physical and mental health. The market will see increased M&A activity and investor interest, driven by the growth potential of adaptable, high-quality spaces. The ‘hotelification’ of workspaces will offer all-in-one solutions, attracting more tenants and prompting landlords to diversify.

Laura Stone

COO, Greencore

2024 was a pivotal year for the housing sector, marked by political change. With a new government prioritising housing, infrastructure and growth, we’re optimistic about the year ahead. 2025 will be the year of the SME housebuilder. Greater support for smaller firms, which the government has acknowledged must be ‘the bedrock’ of its plans, is critical.

This, combined with stronger collaboration between housing associations, local authorities and the wider sector will enable the faster delivery of sustainable and affordable housing. How Homes England prioritises its efforts in order to drive innovation and help SMEs thrive will be key. While initiatives are in place to help accelerate delivery of the 1.5 million homes target, we must stay focused on achieving net zero and shaping the future of living for generations to come. 

Laurie Chetwood

Chairman, Chetwoods Architects

In 2025, the focus will increasingly shift toward sustainable innovation in key sectors such as data centres, retrofit and refurb and in-town industrial spaces. Each of these areas presents unique opportunities to reimagine the built environment in line with the demands of a rapidly evolving world.

Data centres are at the forefront of this shift.  As the backbone of our digital age, they must balance escalating infrastructural requirements with considerations for people/place and environmental responsibility.  Designing these facilities will require integrating renewable energy, efficient cooling systems and adaptive frameworks, positioning them as unimposing buildings in the context of their place. Meanwhile, retrofit/refurb represent an essential strategy in the global push toward net-zero carbon goals. Existing building stock, often rich in historical or structural value, offers opportunities to retain embodied carbon while incorporating modern technologies. From upgrading energy systems to improving material efficiency, retrofitting is a cornerstone of the circular economy.

Toby Pentecost

Senior vice president & co-head of UK offices, Trammell Crow Company

We hope 2025 will see the return of more normal levels of transaction volumes in the office market, led by central London. Many office schemes that seemed unviable after the 2022 Truss mini-budget now look set to benefit from low supply and the race for Grade A office space. Transaction volumes will boost confidence, attracting institutional investors seeking real estate risk, especially in a lower interest rate environment. However, high cost inflation remains a concern for developers. This combined with pressure to deliver housing, will increase competition for skilled construction groups and prove a particular threat to the office sector.

We expect to grow, with demand concentrated on the best buildings in prime locations, and the pre-let market will strengthen. Occupiers are taking space earlier, increasing their risk exposure, and so pricing will increase. Quite possibly only the best developers (in customer experience terms and those well capitalised) will be able to take advantage.

Simon Morgan

Partner, Morgan Real Estate.

The UK prime office market is set to lead commercial real estate to recovery, with rising values and an uptick in take-up during the final quarters of this year laying the groundwork for further growth. Several factors, such as limited future supply in central locations, strong post-return to office demand for sustainable, state-of-the-art spaces and an economic boost from the Bank of England’s gradual interest rate cuts, are driving this momentum. As these elements align, the market is primed for further growth and great opportunities ahead for 2025.

We will continue to identify, source, and implement thoughtful office solutions for our investors and occupiers, ensuring that the spaces we create and maintain align with the growth trajectory of the UK prime office market.

Mark Whittaker

Executive director, Peel Retail & Leisure

2024 was a landmark year for Peel Retail & Leisure, marked by significant milestones, and we’re excited about the opportunities 2025 holds. Gloucester Quays celebrated its 15th anniversary, securing new deals across 44,000 sq ft. Trafford Palazzo saw its best ever footfall, with a 7% year-on-year increase and more than 80,000 sq ft of lettings. Quayside at MediaCity attracted £2.5m investment from new leisure attraction, Oxygen Activeplay, with more coming. Kargo Mkt marked its first anniversary with a 9% sales increase, and Peel’s Retail Parks are thriving, now 95% occupied, with key lettings including M&S Simply Food, Furniture Village and The Padel Club.

Momentum from 2024 set the stage for a dynamic 2025. With our diverse outlet and retail parks portfolio spanning more than 2m sq ft, along with leisure-led destinations, we’re poised for continued evolution.

Visitor experience, engagement and innovative placemaking remain at the heart of everything we do, driving loyalty and creating destinations where people want to visit and spend meaningful time.

Arvi Luoma

Head of European equity, Cain International

2025 should mark a compelling opportunity for investors as we have passed through the trough and move into the next cycle, particularly in sectors that have remained resilient through recent economic headwinds. The industrial and logistics sector’s recovery in 2024, with broadly prevailing supply-demand imbalance, points to strong momentum bolstered by trends like near-shoring in response to geopolitical tensions, the steady growth of e-commerce and net-zero initiatives.

In the living sector, PBSA, which has seen extraordinary rental growth in recent years, remains an interesting prospect supported by the UK’s world-leading higher education sector and continued growth in student numbers, while more nascent markets such as that of Spain and Portugal should also prove attractive. The net lease market, offering stability, asset value preservation and security of income throughout cycles, is gaining prominence in Europe and will be bolstered by corporate drive for growth and efficiency improvements, with businesses leaders looking to alternative capital solutions like sale-leaseback and build to suit financing.

Finally, with strong tourism growth in 2024 and increasing travel spend, we see opportunity in the hospitality sector, particularly in the lifestyle, luxury and experiential segments.

My hope for 2025 is that calmer minds prevail, geopolitical tensions abate and everyone transitions to a growth mindset to fuel activity, backed by a consensus of stability and opportunity. We see great prospects ahead and Cain will be actively participating in the market in 2025 and beyond.

Sara Anzinger

SVP capital markets, Measurabl

In 2025, financial drivers will dominate the sustainability push in real estate. Rising energy costs and tighter regulations have strengthened the business case for energy-efficient, low-carbon buildings. These properties generate higher cost savings, attract tenants, increase NOI and unlock access to ESG-aligned capital, which is projected to exceed $40tn, cross-asset, by 2030.

This shift is transforming the industry, merging financial and sustainability metrics. ESG performance is now critical to valuation models, investment strategies and insurance underwriting. Portfolios with robust ESG credentials are better positioned to attract capital, mitigate risks and deliver long-term value. These trends are accelerating decarbonisation and energy efficiency, with measurable reductions in emissions and operational costs.

Expect a much closer alignment between financial metrics and sustainability metrics within real estate in 2025, underpinned by greater demand for higher quality ESG data.

Camilla Topham

Co-founder, Distrkt

UK hospitality operators will continue to face operational challenges at the start of 2025 such as soaring fit out costs, increasing staff costs, rising rents and weaker consumer demand, which is fundamentally making new openings less financially viable. This will result in a flight to prime with operators in the main considering sites that are ‘no brainers’. As a result, locations such as the West End and Borough Market will continue to thrive.

As these challenges are more pronounced in London, UK operators are shifting their focus to Manchester and more will be following in the footsteps of Caravan, Lina Stores, Blacklock and Grind. Regional cities offer lower operational costs enabling expansion to be more appealing and sustainable as well as untapped growth potential due to increasing consumer demand for high-quality, cosmopolitan dining experiences outside the capital. Manchester, with its growing population, vibrant food scene and improved infrastructure is hugely attractive for expanding operators and we predict that many more operators will look to open in the city this year.

Tom Stobbart

Centre manager, The Liberty Romford

2025 will be all about balance – finding the sweet spot between meeting rising customer expectations and staying agile in the face of economic challenges. Customers expect more than ever – convenience, quality, and unique experiences – whilst stakeholders seek a resilient and commercially viable asset in a time of rapidly rising costs.

At The Liberty Romford, we’ve seen the power of making small but meaningful changes that build momentum over time, a process we call ‘transformation through accumulation’. This approach has taught us that incremental improvements can have a big impact. In 2025, the opportunity lies in staying connected to what customers want and responding with thoughtful, steady enhancements rather than chasing quick (and often expensive!) fixes.

Retailers and landlords need to focus on adaptability and resilience. By staying tuned to community needs and making considered evolvements, the sector can navigate uncertainty and continue to thrive in the year ahead.

Ciara Daffy

Asset manager, CBRE Investment Management

The retail sector has proven increasingly stable in the last year, and that’s given us a positive outlook for 2025. Retail destinations are proving their importance to communities, something that really inspires our actions and strategy. Those that encourage community engagement enhance the experience for both customers and occupiers in equal measure, shown by two assets under our stewardship in particular, Angel Central and Ashley Centre, where it’s paramount to success.

Building and nurturing relationships, whether between people and place or landlord and tenant, must remain the priority and enhance the halo effect across sales, footfall, dwell time and overall experience. We also expect to see several operators expand in 2025. This will give the UK market fresh and exciting concepts, creating new leasing opportunities for the destinations that can evidence success and growth potential.

John Condliffe

Partner, Davitt Jones Bould

Artificial intelligence and cloud computing now underpin our daily lives, relying on data centres to keep things working. The demand for data centres continues to grow, with global capacity expected to double between 2023 and 2027. This will create opportunities for the real estate industry to develop new sites and expand existing ones. There will also be more demand for the specialist knowledge required for the development of data centres.

This growth will impact local power infrastructure, since data centres use large amounts of electrical power and can put strain on national grids that are already near capacity. Data centres in the Republic of Ireland use more than 20% of all electrical power consumed nationally. Data centres need to be able to connect to the grid as soon as they are built, yet currently some centres can wait several years for a connection or planning consents for new substations. There are also major backlogs in connecting renewable generation sources to the network.

Ofgem has recently announced plans to reform the grid connections process and fast track applications, to reduce waiting times from years to months by changing the terms of the network licences. Under this new regime, expected to be in place within 12 months, network operators could face tougher enforcement if they don’t meet the new, stricter requirements. 2025 could prove to be the year when the grid connection bottleneck is removed.

Louise Ioannou

UK head of workspace, HB Reavis

In 2024 we achieved success through office lettings and continued occupier appetite for low energy design, amenity-rich offices designed to foster dynamic end-user experiences, blurring the boundaries between hospitality and the workplace.  I hope that 2025 sees a continued demand for prime offices that focus on cultivating employee connections and a sense of belonging.  I anticipate a continued need for flexibility of space and expect to see landlord and occupiers work collaboratively to complete transactions.

I also expect continued interrogation of office use and consideration of the most appropriate re-use – with social value as the next real estate essential. There are clear benefits to attracting a rich pool of talent, supporting recruitment and retention – that’s an essential for attracting investors, extending London’s legacy and supporting the UK’s growth.

Graeme Jones

Executive director, Sovereign Centros from CBRE

If last year was about transformation and delivery in shopping centres, 2025 will put them in the crosshairs of the investment market. 2024 saw Merry Hill, a leader in the transformation of shopping centres, welcome debut Harvey Norman and XF Gym flagships alongside record £30m investment. Another top 10 super regional, Metrocentre, opened a 40,000 ft2 NHS Community Diagnostic Centre, a UK first. Festival Place in Basingstoke signed Superbowl UK, a landmark leisure function that will significantly boost the town.

We were also appointed by M&G on Cribbs Causeway, demonstrating their confidence in retail for the longer term. We’re now responsible for elevating an already strong centre into a market leading destination. These positive events speak to change and how leading centres across the country have adapted to customer and occupier needs. By keeping them relevant to the people they serve, they are now best placed to benefit from the changing marketplace expected in 2025.

Alex McCulloch

Director, CACI

The built environment stands at a crossroads largely built by the government. While 87% of people support housebuilding on previously developed land, only 45% are comfortable with development in the green belt, with even lower approval from those living near these areas. The government has struggled in the public perception to differentiate between ‘grey belt’ and ‘green belt’ leading to concerns about “concreting over” natural landscapes rather than redeveloping derelict sites.

In tandem with this, the wider proposed changes to the NPPF could also transform the landscape, the challenge then will be on developers to step up to the plate. Our Social Value Tool has identified that approximately one in 10 of us lack ready access to vital pieces of community infrastructure such as GPs, libraries, parks and post offices and this demonstrates a disparity in accessibility across the nation. So our recommendation to anyone going for planning to placemaking in 2025 would be to think forensically about the needs of the communities they engage and the existing services gaps that they can fill. Then you can demonstrate your value to the planning authority and ensure future success for your development.

Anna Rule

Director of real assets and private markets, Railpen

We are hoping for a strong and growing economy in 2025, one able to attract substantial international capital. This global interest, combined with a domestic focus on private markets, particularly real assets, reinforces the essential role of these investments in driving long-term value for the UK.

Planning reforms and improvements to the National Grid infrastructure would accelerate the delivery of key developments. These advancements will not only improve efficiency, but also unlock new opportunities for growth, allowing funded projects to come to fruition faster, and achieve meaningful positive economic, social and environmental impacts.

Sustainability remains a core theme, with an emphasis on high-quality, resilient assets that deliver lasting value. These assets are instrumental in supporting companies, empowering employees and enriching communities. Through responsible investment and development practices, we aim to contribute to a thriving, sustainable economy that balances strong returns with meaningful social and environmental benefits.

Matthew Chamberlain

Director, Ayre Chamberlain Gaunt 

I hope that 2025 is the year that the government recognises that the planning system is not the only barrier to the delivery of its housing targets. We work with some brilliant local authority planning teams, but a host of other factors are still holding up progress.

The skills shortage has, rightly, been recently highlighted by Barratt Redrow, but perhaps an even greater threat is the overall fragility of the sector. 2024 saw the loss of ISG with a knock-on effect on the supply chain that will continue to echo for a number of years making building capacity even harder. The survival of these businesses is reliant on being able to work, and soon. The advent of the Gateway approval process, particularly for high risk buildings, does inhibit this and, while decarbonisation is critical, the UK Net Zero Carbon Buildings Standard and Future Homes Standard further compound the pressure on design teams, contractors and clients at an already difficult time. 

Lawrence Turner

Director, Boyer

We welcomed the revised NPPF but note Matthew Pennycook’s admission that the government is unlikely to deliver 300,000 homes in its first year. A week may be a long time in politics, but for ministers, clearly a year is too short.

An inevitable (if short term) consequence of the new NPPF will be an increase in speculative planning applications. Developers now have greater certainty of success because many local authorities are in a position whereby they either have an adopted plan that is more than five years old, requiring them to use a substantially increased housing need figure, or are preparing a new local plan to meet this increased housing need.

Invariably planning committees will resist such development and so we expect the government to call in high-profile schemes and decide in their favour. Expect also a rise in the number of planning permissions granted at appeal.

Nick Pettit

Senior partner, Bidwells

After an extended period of subdued transactional activity following the Liz Truss ‘mini-budget’ of September 2022, there is light at the end of the tunnel for investment in the UK’s built environment.

Private investment to facilitate housing delivery will be vital in closing the supply gap, with the operational living sector well positioned to capitalise, given favourable supply and demand dynamics, and resilient rental growth prospects. Labour’s recent changes to the NPPF should help to facilitate further housing delivery across a range of tenure types although the government will need to better address challenges related to resources in the planning system and support for the development community.

In the science and technology sector, we are now seeing the market reach further maturity, with more diverse funding sources – though still difficult to find in volume – and a deeper breadth of occupiers across science and technology industries. This isn’t just life sciences, which has to some degree obscured the sources of demand, but subsectors such as advanced manufacturing, robotics, health tech and AI. This maturity should bode well for the sector going forward.

The energy and renewables sector will also play a vital role in the government’s commitment to decarbonise by 2030, though barriers to access will remain a fundamental challenge if unaddressed due to the electricity grid and the need for reform. Developers will look to progress schemes within a more favourable political environment for renewable energy projects. It will be vital for landowners to take sound advice to assess viability of any developments that do take place on their land.

Susan Freeman

Partner, Mischon de Reya

At the start of a new year, we always hope for the best, but the turbulent weather which marked the move into 2025 could be indicative of what we have in store. The increased certainty that we hoped was on the cards at the start of 2024 has not materialised either nationally or internationally and the geopolitical risks seem to have become more acute. My hope is that the UK real estate sector can position itself as an important part of the solution, particularly in relation to the housing crisis.

One thing is for sure. Artificial intelligence and data will continue to play an increasing role in commercial real estate in 2025. From facilitating acquisitions and leasing to automating management and analysing market trends to predicting tenant and customer behaviour, AI is advancing so quickly that a recent Brad Hargreaves article suggested AI could now emulate many of the skills of a property developer without human intervention!

We will continue to spend more time in the office, so more robust sound management will need to be prioritised to accommodate hybrid working and zoom calls. Offices will have to incorporate better technology, so they function well both for those in the office and working remotely. We will be seeing more phone pods.

It is otherwise virtually impossible to define expectations for 2025. After all, who would have expected the richest man in the world to so actively involve himself in British politics. Who knows where that will end…