Commercial property landlords feeling the chill

If you’ve been following the commercial property headlines lately, you’ll have noticed a familiar chill in the air, and it’s not just the November weather. The latest RICS UK Commercial Property Monitor shows confidence slipping again. Tenant demand has dipped, incentives are climbing, and optimism about rent and capital growth is softening.

Landlords are entering the final months of the year with a mix of caution and fatigue. Budget anxieties and policy uncertainty are adding to what already feels like a fragile recovery.

For many landlords, this isn’t an abstract economic story. It’s playing out in real time, longer voids, more cautious tenants, tighter lending, and lease negotiations that suddenly feel much harder than they did a year ago.

A market that feels different

Commercial property has weathered plenty of cycles before, but this one feels different. Demand is softening across all sectors, with retail leading the fall, but even the once-resilient industrial market is showing signs of strain. London remains more resilient, yet even there, landlords are offering bigger incentives just to hold onto strong tenants.

For small to medium-sized landlords, those numbers hit home in a different way. With smaller portfolios, there’s less capacity to absorb a long vacancy or fund a costly refit to secure a new tenant. The cost of borrowing is higher, valuations are volatile, and confidence in future rent growth has weakened. The usual sense of predictability that underpins property ownership has started to erode.

This is a moment when strategy and structure begin to shape outcomes.

The legal levers that matter most

In buoyant times, many small landlords take a lighter approach to lease terms. When tenants are plentiful, the finer points of repair clauses or rent reviews can fade into the background. But in a market that’s cooling, those details matter.

Lease negotiations are becoming tougher. Tenants are asking for longer rent-free periods, more generous fit-out contributions, and flexible break clauses. Landlords are looking for greater security in return, such as guarantees, deposits, stepped rents, and stricter assignment provisions.

For those holding older or secondary stock, the stakes are higher. Incentives might be necessary, but they should be structured carefully. A well-drafted lease can balance flexibility for the tenant with protection for the landlord, but only if it’s grounded in the realities of today’s market.

What small landlords can do right now

This isn’t the time to sit back and wait for confidence to return. It’s a good moment to take a hard look at your existing leases and those currently under negotiation. Are rent reviews still realistic in light of softer growth? Are your break clauses watertight? Do you have the flexibility to re-let quickly if a tenant moves on?

Revisit any incentive arrangements you’ve offered. Rent-free periods can work well, but make sure they’re linked to tenant performance or duration so you’re not left out of pocket if a tenant defaults early. If you’ve agreed on refurbishment or fit-out works, ensure obligations are clearly defined and enforceable.

It’s also worth thinking about financing. Smaller landlords can be more exposed to interest rate changes or refinancing challenges. Keeping your lender in the loop, even when things are stable, can make difficult conversations much easier if the market turns further.

Looking ahead

No one is expecting a rapid rebound, but that doesn’t mean this is a lost year. Downturns can offer space to regroup, renegotiate, and plan ahead. Landlords who stay alert, manage risk proactively, and keep their legal documentation tight are the ones who will weather this patch best.

The message from the RICS data isn’t just about gloom but more about adjustment. It’s time to adapt, not retreat. A thoughtful, well-structured lease strategy and a clear view of your risks will go a long way toward keeping your portfolio resilient, even in uncertain times.