Safe Betting Returns: 2026 Is the Odds-On Winner for Retrofit in the Commercial Market

There is a point in any market cycle where the surface indicators barely move, but the underlying behaviour changes completely. That is where we are with the UK commercial property market.

After several years of drift, the latest data from BPS London points to a shift that you should pay attention to.

Non-residential transactions are forecast to rise by 6% in 2026, following a marginal -1% decline in 2025. On paper, that is a modest recovery. In reality, it signals the end of a holding pattern that has defined the sector since the post-pandemic rebound.

The numbers alone do not tell the story. The motivation behind those transactions does.

“Over the last few years the commercial property market has largely been in a holding pattern, with transaction volumes moving slightly up or down but without any sustained period of growth. However, the forecast for 2026 suggests we may now be entering the next phase of that cycle, where improving confidence across the sector begins to translate into stronger levels of transaction activity.”
- Mahir Vachani, Director, BPS London Developments

BPS London’s own activity reinforces the point. The acquisition of a West End office building on Tottenham Court Road, backed by private capital and positioned for upgrade, is not an isolated deal. It is in fact, a signal of intent backed by action. The strategy is clear: acquire well-located assets and reposition them to meet modern occupier expectations. It's intentional.

That aligns directly with what has been observed across the sector over the last twelve months. At UKREiiF, asset managers and landholders repeatedly returned to the same problem: buildings that no longer meet performance expectations. These are not derelict structures. They are functional, but insufficient. Too inefficient to lease effectively. Too expensive to ignore. Too far behind to compete without change.

The term that surfaced was “orphaned assets”. Buildings drifting out of viability, not because of location or structural failure, but because they cannot meet the demands now placed on them. These assets are being moved on at pace. Not abandoned, but transferred to those willing to take on the work required to restore them.

This is where the market behaviour becomes more revealing than the data. Buyers are not seeking pristine assets. They are targeting underperformance. The opportunity is not in what a building is, but in what it can become once upgraded.

Spend time inside these buildings and you get a sense of what they could become. Once you solve the problems.... Heating systems that are misaligned with the fabric. Cold spaces in buildings that should be productive. Operational inefficiencies that compound into tenant dissatisfaction and reduced asset value.

Then the intervention takes place. Systems are replaced. Heat delivery is redesigned. Performance is recalibrated. The change is immediate and measurable. The building begins to function again.

This pattern is repeating across NHS estates, commercial offices and mixed-use developments. The assets that hold value are not necessarily the newest. They are the ones that have been made to work.

At the same time, there is a broader shift in how capital is behaving. Market commentators, including Scott Galloway, have been pointing to a growing imbalance between highly valued intangible assets and assets that generate durable, predictable returns. In his recent analysis and discussions on the Prof G Markets podcast, Galloway has highlighted how quickly sentiment can shift when expectations are priced too far ahead of reality. When that happens, capital looks for something it can rely on.

Buildings fall into that category, but only under certain conditions.

A commercial asset now has to prove its value continuously. It must demonstrate energy performance, meet regulatory standards, provide comfort, and operate efficiently. If it fails on those fronts, location alone is no longer enough to sustain it. It becomes exposed. That exposure is what is driving transactions.

This reframes the role of retrofit entirely. It is no longer positioned solely as an environmental upgrade or a compliance exercise. It is the mechanism through which buildings remain viable. It determines whether an asset can be let, whether it can attract investment, and whether it can be traded with confidence.

The projected increase in transaction volume in 2026 should be read through that lens. It is not a surge driven by expansion. It is movement driven by repositioning. Capital is re-entering the market with a defined objective: acquire assets that can be improved and bring them back into line with modern expectations.

That creates a direct advantage for the retrofit sector. Demand is not being generated by policy alone, but by market necessity. Investors require solutions that can restore performance. Asset managers require evidence that upgrades deliver measurable results. Owners require pathways that prevent assets from slipping into obsolescence.

A building that performs is stable. A building that does not becomes a liability. That distinction is now being priced into the market.

What follows from this is straightforward. As transaction volumes increase, so does the number of assets entering a cycle of evaluation and upgrade. Each acquisition carries with it an implicit requirement: can this building be made to work, and will that work hold its value over time?

Those are retrofit questions.

The significance of the BPS London forecast is not the percentage increase. It is the confirmation that capital is beginning to act again, and that it is doing so with a focus on assets that require intervention.

The commercial property market is not returning to its previous form. It is establishing a new baseline in which performance is central. In that environment, retrofit is not adjacent to value creation. It is the process that enables it.

Working in commercial retrofit? Buckle up butter cup.