Global backdrop and outlook
The international environment remains unsettled. Continued conflict in Ukraine and the Middle East, alongside shifting geopolitical alliances, has been a sobering reminder of the fragility of the global order. These events inevitably weigh on confidence and decision-making, even for businesses focused firmly on domestic markets. As we look ahead, there is a shared hope that 2026 brings greater stability and progress toward peace.
Against this backdrop, economic and occupational fundamentals in the UK have shown increasing resilience. While uncertainty has not disappeared, conditions are becoming more predictable, allowing businesses to plan with greater confidence than in recent years.
Big box logistics begins to recover
A renewed emphasis on supply-chain resilience is driving a shift toward onshoring across Europe and the UK, whether through strategic choice or necessity. This is particularly evident in defence, technology and large-scale retail, where occupiers are seeking greater control over inventory and distribution networks.
We see this as the emergence of a longer-term demand trend, distinct from the supply-driven constraints and non-traditional industrial demand that have characterised the market since 2010.
The impact is already visible in the big box logistics sector. Take-up in 2025 is approximately 11% ahead of 2024 levels, reaching around 36 million sq ft. High-profile transactions, such as major retailers committing to facilities in excess of 1 million sq ft, underline renewed occupier confidence at scale.
As in previous cycles, recovery in the big box market is expected to feed through into the mid-box and multi-let industrial sectors over time, supporting occupational demand across the broader industrial spectrum.
A more stable economic environment
Inflation in 2025 broadly tracked expectations. Having fallen close to 2% in mid-2024, CPI rose to 3.8% by mid-2025 before easing to 3.2% by November. While still above target, inflation is forecast to fall below 3% during 2026 and continue trending toward 2% by year-end.
Interest rate markets have stabilised. Five-year swap rates, which stood at 4.07% in December 2024, rose briefly in early 2025 amid renewed inflation concerns before settling back to around 3.95%. Four base rate cuts during the year reduced the bank rate from 4.75% to 3.75%, with markets now pricing a further 50–75 basis points of reductions in 2026. Meaningful further falls in swap rates are likely to depend on inflation clearly returning to target.
Encouragingly, business failures declined by around 5% in 2025, moving away from the peaks seen in 2023 and 2024. Improved funding conditions have supported a recovery in commercial real estate lending, with volumes up by approximately one third as banks reduced margins and adopted a more constructive stance toward the sector. We expect this environment to remain supportive through 2026, with increasing competition from debt providers as confidence builds.
The government’s November Budget also helped to steady financial markets, raising £26 billion in taxes to underpin its spending plans. While this implies a higher future tax burden, it has contributed to greater fiscal clarity. Taken together, these factors should enable occupiers and business owners to make more considered decisions about their property requirements in 2026.
Against this improving backdrop, 2025 has been another busy and productive year at Sandyford. Within an environment of economic uncertainty and uneven performance across sectors, we continued to make steady progress across portfolio management, transactions and team growth.
Occupational portfolio and asset management
In an economy that has remained in flux, 2025 saw a higher level of occupier turnover than in recent years, albeit alongside strong letting activity. We completed 71 new lettings and 40 lease renewals across the portfolio.
The year ended with a vacancy rate of 4.5%, marginally higher than in previous years, although little of this represented long-term voids. The volume of activity and the rents achieved are testament to the hard work of our Senior Asset Manager, Charlotte Worthington, and our letting agents across the regions.
Overall, we delivered 11% growth in the rent roll. We finished the year with gearing of just 11%, leaving us well positioned with significant debt capacity to support future growth.
An active year for transactions
Despite a generally sluggish transactional market, we completed two acquisitions – Block A, Manor Point in Holmes Chapel and Salcombe Road Industrial Estate in Alfreton – and two disposals.
These transactions have moved Sandyford further towards its long-term objective of being focused solely on multi-let industrial assets, which now account for 94% of rental income. Our emphasis remains on purpose-built, terraced industrial units – typically sub-10,000 sq ft – that appeal to a broad range of occupiers.
The acquisition in Alfreton also marked our first investment in the East Midlands, a region that offers considerable potential for future expansion.
In addition, a further disposal had exchanged by year-end with completion expected in early 2026, while another acquisition entered advanced legal stages before the close of the year. As a result, we enter 2026 with strong momentum and an active first quarter ahead.
Building the team and the operational base
The Sandyford team has continued to grow during the year as we invest in the people and systems required to support both current operations and future expansion. Jason Goss joined as Head of Building Surveying, Lisa Cooper joined the purchase ledger function and Charlie Grange was appointed to the newly created role of Facilities Manager to strengthen our property management capability.
Alongside this, significant investment has been made in IT and information systems to enhance financial control, compliance and scalability.
We have also relocated our head office to Festival Way, Stoke-on-Trent, providing additional space and a more modern working environment for the team.
Building lasting connections
Away from day-to-day operations, 2025 has also been a year of strengthening relationships across our network. We have spent time with agents, partners and colleagues at a wide range of events from industry dinners and awards to cricket test matches, Chester races and go-karting.
Internally, our team offsite at the World of Wedgwood provided a welcome opportunity to step back from the day job. While it confirmed that we are better at property than pottery, it was an enjoyable and valuable way to bring the team together.
