Business Outlook 2026 | Retail

Against the backdrop of difficult trading in high street retail, the forecourt and convenience sectors were in high demand in 2025. This not only applies to the operator market, but also the mainstream real estate investment market where we saw a surge of investment deals in the second half of 2025. Independent entrepreneurs continue to be attracted to the needs-driven nature of convenience and grocery, while investors are drawn by the security of tenants who enjoy the resulting strong trading fundamentals.

We received over 2,300 new web registrations by buyers looking to acquire retail sites across the UK and advised on retail businesses with a combined value of over £1 billion in 2025, demonstrating the strength of demand and activity in the market.

Fuel retailers have faced unfair criticism of fuel pricing from the RAC, and most recently the Chancellor of the Exchequer, and continue to battle against costly unchallenged criminality. Higher overheads resulting from the last round of Budget measures meant holding onto fuel margin was inevitable. Private entrepreneurs who are increasingly asked to shoulder the tax burden are entitled to maintain profitability in a market which remains competitive.  

The failure of the government to provide sufficient incentives for consumers to switch to Electric Vehicles (EVs) and the inability of many consumers to make the switch is elongating the period of time required for the market to fully transition to alternative fuels. As such, the horizon for investing in the forecourt sector appears to have extended for investors.  We have therefore seen a return of private equity and significant investment into the market, supported by the main clearing banks whose ESG agendas seem to have softened.

Our garden centre team continues to go from strength to strength, selling more garden centres in 2025 than last year. This includes mandates from significant investors who needed our specialist services in the face of restructuring at Dobbies. Trading conditions remained favourable for most centres, helped by good spring weather. It remains to be seen whether the macroeconomic headwinds affecting distribution and manufacturing will impact the products garden centres offer.  For now, the outlook is positive.

Investor appetite for retail assets remains resilient, with convenience stores, petrol filling stations, and garden centres continuing to attract capital amid shifting market dynamics and easing borrowing costs.

Convenience store investments in lot sizes below £1.5 million remain popular amongst private investors, and there is some evidence of an inward flow of capital from the residential sector. Prime yields for index-linked convenience store investments have shown some signs of compression as base lending rates have reduced and demand has firmed.

However, investors are sensitive to short unexpired lease terms, especially when most national supermarkets are disposing of stores with lower levels of turnover. Such investors should take comfort from the strength in the operational market. Retailers may well pay more for a freehold property they can trade themselves than for one that simply creates rental income.

Repricing in the petrol filling station investment market during 2023/24, coupled with a subsequent reduction in borrowing costs, has sparked some new interest from cash-rich investors with some experience in the automotive sector, and transaction volumes increased during 2025. A selection of forecourt operators have emerged as active buyers of petrol filling stations with short unexpired lease terms. These offer the potential to be directly operated following lease expiry and are otherwise viewed as low-risk medium-term investments.

Prime yields for the best quality modern petrol filling station investments are relatively stable, but the pool of buyers for these higher value investments is limited.

The garden centre investment market is relatively small, and institutional investors are focused on larger lot sizes, good quality properties with high EPC ratings and strong tenant covenants. Demand for garden centres with shorter leases, older buildings and weaker tenant covenants is significantly less robust and yield differentials of up to 300 basis points between prime and secondary investments are possible.

Despite economic headwinds, the resilience of convenience, petrol filling station and garden centre businesses, coupled with low vacancy rates and reduced borrowing costs, will support values in the short term and we expect yields to remain broadly stable in 2026.