The early months of the year have seen improving stability and confidence across the commercial property sector, underpinned by constrained supply, strengthening investor appetite across key asset classes and a cautiously optimistic outlook.

Transaction volumes in Q1 totalled £365 million, representing an 81% increase on Q1 2025 and just 6% below the 5-year average, indicating a strong start to the year. The average lot size stood at £11m.

While debt costs remain difficult to pin down, amid ongoing swap rate fluctuations, investor confidence is evident, particularly in the resilience of Edinburgh’s office market and continued belief in its rental growth story.

The largest transaction of the quarter was Melford Capital’s c. £78m acquisition of Waverleygate in Edinburgh from Kennedy Wilson. Other notable deals included Aberdeen Investments’ £26.5m acquisition of Cuckoo Bridge Retail Park in Dumfries from NewRiver; Lothian Pension Fund’s £23.4m acquisition of Hanover Buildings in Edinburgh from Oval Real Estate and the £8.03m acquisition of a Lidl store in Finnieston, Glasgow by Watkin Jones from The Ambassador Group.

Lismore director, Chris Macfarlane, said: “The first quarter of 2026 began with renewed optimism for increased deal activity, and while macroeconomic headwinds have proven more persistent than expected, the Scottish investment market continues to show resilience.

“Activity has been particularly evident in the £5m–£15m bracket, with property companies, private investors and family offices actively targeting opportunities, alongside continued acquisition appetite from French SCPIs.

“The office sector has led the way, with Edinburgh benefiting from strong rental growth projections, driven by constrained supply, while Glasgow is showing signs of stabilisation, through a series of completed transactions and increased take-up. 

“Despite ongoing geopolitical uncertainty and upward pressure on gilt yields tempering rate cut expectations, the market has adapted to volatility, with sustained demand for high-quality assets across a diverse investor base.”

“Sectorally, office deals accounted for 48% of volumes. Logistics continues to attract strong demand on the back of compelling rental growth prospects, while PBSA appetite is pivoting toward more affordable, value-led schemes. Across the board, however, a persistent lack of quality stock is sustaining competitive tension, with well-positioned assets continuing to attract robust interest and pricing.”