What the UK Real Estate Recovery Means for Landlords

Design ESG 17th January, 2025

As the UK’s real estate market gears up for recovery in 2025, landlords are poised to play a key role in shaping the future of commercial spaces. With a forecasted 15% increase in investment volumes and a shift towards more sustainable, technologically advanced properties, the year ahead offers significant opportunities.

The UK Government’s Invest 2035 strategy outlines key growth opportunities in the life sciences, finance, and tech sectors, industries driving demand for high-quality office spaces. The plan emphasises the importance of infrastructure improvements to support this growth, presenting landlords with opportunities to align their properties with emerging tenant needs.

Understanding Tenants’ Changing Priorities

The recovery brings a significant shift in tenant expectations. Businesses emerging from years of uncertainty are now prioritising workspaces that align with their operational needs, values, and employee expectations.

Meanwhile, the UK Government has set a target to reduce carbon emissions by 81% by 2035. With the built environment accounting for 40% of the nation’s emissions, energy efficiency upgrades, renewable energy solutions, and achieving certifications like BREEAM or WELL have become essential for landlords aiming to attract environmentally conscious tenants.

The upcoming Future Homes and Buildings Standards, set for 2025, further highlight the push for energy-efficient, low-carbon commercial buildings, offering landlords a chance to align their portfolios with these emerging standards and future-proof their properties.

Changing workforce expectations are driving demand for adaptable environments. With firmly established hybrid working models, businesses require office spaces accommodating fluctuating team sizes and diverse work styles. Tenants are seeking flexible layouts, shared amenities, and the ability to scale their space usage as needed. Location and accessibility remain key factors in tenant decisions, with businesses favouring well-connected areas that offer convenient transport links and a vibrant mix of nearby amenities.

A close-up of the bar at Authentic Brand Group, designed by Modus, highlighting the elegant marble counter, textured tile backdrop, and stylish shelving with liquor bottles and a coffee machine.

Building a Brand

As competition increases, a robust marketing strategy is essential for landlords looking to attract prospective tenants. A distinct brand rooted in the building’s history and character can leave a lasting impression, as demonstrated by The Waterman, where our sister company, Ambit, was the main contractor.

The Waterman’s branding combines creativity and clarity, embracing Victorian-era charm with phrases like “Zero Balderdash,” “architectural grandeur,” and “like butter on bacon.” This playful yet evocative tone captures its historical elegance while celebrating its reinvention for modern tenants. Features like interactive floor plans and leasing options make the website both engaging and practical, ensuring prospective tenants can explore with ease.

Location is central to its appeal. The Waterman’s “The Whimsical Wayfarer’s Handbook” uses witty Victorian-inspired language to highlight its Farringdon setting, emphasising excellent transport links, boutique fitness studios, artisan coffee shops, and gastro pubs, creating a perfect balance of work and lifestyle.

Marketing should also spotlight key features like sustainability credentials, advanced technology, and premium amenities to demonstrate value. With demand for Grade A workplaces driving rental growth, emphasising energy-efficient upgrades and Net Zero targets by 2050 attracts environmentally conscious tenants.

The Waterman exterior, a project completed by Ambit, Modus's sister company, showcasing the restored building's striking architecture under a clear sky.

Opportunities in a Recovering Market

The recovery of the UK real estate market in 2025 presents a unique chance for landlords to reshape their strategies and align with evolving tenant demands. A forecasted prime rental growth of around 6% across most UK markets and an increase in investment volumes, combined with a constrained supply of Grade A offices, positions sustainable and tech-enabled properties as prime opportunities for growth. These high-quality assets are expected to command higher rents and attract long-term tenants who value modern, adaptable, and environmentally responsible workspaces.

To seize these opportunities, landlords must adapt to stricter sustainability requirements under regulations like IFRS Sustainability Disclosure Standards and the Corporate Sustainability Reporting Directive (CSRD). Demonstrating compliance through reliable, verifiable ESG data will be key to meeting tenant and investor expectations while maintaining market competitiveness.

As tenant priorities continue to shift towards flexibility, sustainability, and advanced technology, landlords who proactively invest in energy-efficient upgrades, premium amenities, and climate resilience measures will stand out in the competitive landscape.

Find out more about Shifting ESG Legislation: Risks and Opportunities for Property Owners here.