This month's Property Pulse finds increasing optimism in the office sector. Real Estate Finance lawyers Nick Turner and Katharine Langabeer report that a defining feature of the current market is a growing divide between premium and secondary office stock. Or as they put it, quality over quantity.
Many businesses recognise that high-end, well-designed office environments are vital to attract and retain talent. Occupiers are becoming choosy, if they weren’t already. Location is as important as ever, but design, functionality and sustainability are also central to tenant choice.
High-spec office space in central London can be pricey. The shift in occupiers' priorities presents opportunities for investors outside the capital, in Bristol, Leeds, Birmingham and elsewhere. Strong demand for Grade A space and increasing rents should sustain deal flow as confidence strengthens.
Having shared all that positive news, there are a number of changes for which investors need to plan ahead. In Office market recovery masks regulatory cliff for investors (subscription required), partner Henrietta Garner points to a regulatory transition sitting beneath the improving market. This transition is set to play a decisive role in determining future value, liquidity and pricing.
Revised metrics for producing EPCs (energy certificates) are expected later this year, with minimum energy efficiency standards tightening towards an EPC B requirement by the end of the decade. Bringing a building from a D to a B grade is rarely a light-touch upgrade, often involving intrusive works.
The proposed ban on upwards-only rent reviews adds another fault line. These clauses have long given UK investors predictable income behaviour and supported debt structures. If the ban goes ahead, the impact will extend across valuations, cashflow projections and fund performance. Business plans probably need to adapt now.
Investors are also being encouraged to prioritise refurbishment over full-scale redevelopment, to reduce embodied carbon. While this clearly aligns with ESG and planning goals, it can create regulatory exposure as deep refurbishments may trigger more extensive compliance obligations.
There is an upside: opportunity lies where compliance is already priced into underwriting. For example, stock with a credible pathway to EPC B is likely to attract a liquidity premium. Early movers who secure capex and lock in design pathways are positioned to benefit from compliance-driven pricing later in the cycle. Or as Henrietta puts it, those planning for this now are more likely to be holding the buildings the market wants in 2030.
In the meantime, a 268-hectare theme park is coming to Bedfordshire! Entertainment giant Universal has obtained permission to build a major development which will surely bring thousands of jobs and economic activity – and international tourists – to the area.
Universal submitted their formal request in June 2025. A public consultation was launched in July. In December, Secretary of State Steve Reed granted permission.
Wait – how can you get planning permission for such a huge project in six months, start to finish? As planning lawyers Nicholle Kingsley and Danyal Raza explain in Universal Planning Power, the answer is that this was not planning permission; this was a Special Development Order or SDO.
SDOs are a unique planning instrument. They are secondary legislation under the Town and Country Planning Act, in the form of an order made by the Secretary of State. Until now, SDOs have been used mainly for Government projects such as development at RAF Manston Airport or temporary accommodation for asylum seekers at former RAF Scampton. In other words, government-led, national security focused initiatives on public land.
The Universal SDO is the first time this procedure has been used for commercial development. This rapid progression from submission to permission within six months is likely to prompt other commercial developers to explore this route for major projects in the future.
Our article explains how Universal persuaded the Government that the normal planning permission route would not be suitable, and an SDO was therefore justified. It is possible that developments involving a large range of different uses, or those bringing benefits such as tourism on an international scale, would have the best chance of qualifying.