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Commercial Property Market Review October 2025
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Monthly market update
The latest data from Savills reflects a commercial property market that could either be considered as stable or sluggish. This is highlighted in our Commercial Property Market Review for October 2025.
The figures indicate the commercial market that is holding its ground against a backdrop of ongoing economic and political uncertainty. Since February, the average prime yield has remained steady at 5.9%. This suggests a degree of predictability despite wider market pressures. While four sectors are showing a downward trend, seven sectors have not changed for at least 18 months. While this may spark concern about stagnation, it could also offer reassurance for investors. They are prioritizing consistency in the Commercial Property Market Review.
There are some positive signs for the market. In the second quarter of this year, commercial property investment reached the second-highest level recorded in the past 13 quarters. Looking ahead, Savills predicts that, by the end of 2025, total investment volumes for office and industrial sectors will exceed the 2024 total, as highlighted in the Commercial Property Market Review | October 2025.
Increased investment in hotel sector
UK hotel investment showed strong growth in the third quarter of this year according to Savills. The details are explored in the Commercial Property Market Review | October 2025.
Total hotel investment reached £1.04bn in Q3, marking a 28% year-on-year increase. This growth was largely driven by single asset transactions, which represented 92% of all activity. This was nearly 60% above the ten-year average for Q3.
London was the investment hotspot in Q3. Total volumes rose by 42% year-on-year to £697m. Savills suggested that this strong performance was due to the capital’s large share in hotel stock combined with a rebound in investor appetite.
David Kellet at Savills commented, “While the first half of the year was defined by operational and investor uncertainty in the UK hotel market, sentiment has stabilized through Q3.” He added, “We expect the single asset market to remain robust whilst also anticipating more larger portfolios to transact in 2026.”
How’s the Scottish market faring?
Analysis from Knight Frank shows a total of £1.46bn was invested in Scotland’s commercial property market during the first three quarters of 2025.
Although this represents a 21% decline compared with the same period last year (£1.85bn), it remains broadly in line with the average levels for Q3 during 2020-2024. The Commercial Property Market Review | October 2025 provides further insights.
So far this year, retail is the sector that has attracted the highest volume of investment, totaling £452m. The industrial sector also performed strongly, recording its second-best third quarter since
the pandemic, with completed deals worth £153m. International investors are on track to have their highest share in investment since 2022, accounting for 45.9% of deals in the first three quarters of the year.
Alasdair Steele at Knight Frank observed, “Fewer deals are happening, but the assets that are trading hands tend to be higher quality buildings in prime locations. These assets are attracting a good deal of interest.”
The place of AI in commercial property
Artificial intelligence (AI) is being adopted across the commercial real estate sector in a variety of ways. It’s transforming how the industry operates.
The technology is increasingly being used to enhance efficiency and support decision-making. AI systems can analyze years of market data in just minutes. This helps underwriters to generate faster valuations and enables asset managers to assess the potential impact of interest rates and policy changes. This frees up professionals to focus on other tasks, such as client relationships and strategy planning.
AI is not just adopted by market analysts; it can also be used in the commercial properties themselves. For example, smart systems are helping to reduce energy use and improve comfort by automatically adjusting heating and cooling systems based on real-time data. CBRE explained, “By harnessing machine learning, building managers can now see weeks in advance when a system might fail, preventing tenant disruption and lowering costs.”