Despite economic headwinds and cautious investor sentiment, the South Coast commercial property market continues to show resilience and adaptability.
Our latest VW Insider – South Coast Property Report reveals that while supply constraints persist, occupiers and investors remain firmly focused on quality , particularly in well-connected, sustainable locations such as Southampton, Portsmouth and Bournemouth.
Holding steady in uncertain times
Across all sectors, activity through the first half of 2025 has been steady rather than spectacular, but that stability is a story of underlying strength.
The regional economy remains diverse and robust, supported by its strong marine, technology and defence sectors and a growing innovation ecosystem.
As Russell Miller, Regional Managing Partner for the South Coast, notes:
“The fundamentals of demand are sound. What we’re seeing is a continued rebalancing of the market, occupiers consolidating space, but upgrading into higher-quality, ESG-aligned accommodation. That’s creating opportunity for landlords who can meet those standards.”
Offices: The ESG effect and flight to quality
Office take-up across the South Coast totalled around 185,000 sq ft in H1 2025, broadly in line with recent averages. Demand remains strongest for modern, sustainable, well-located space that reflects new ways of working.
In Southampton, prime rents reached £30 per sq ft, following lettings such as Starling Bank at Twenty3 Brunswick Place, one of the few genuinely Grade A city-centre offices. Portsmouth also performed strongly, with headline rents around £27.50 per sq ft at Lakeside North Harbour.
However, availability of top-quality stock remains limited. New development is scarce, and much of the current supply is secondary. The result is a growing performance gap between Grade A and Grade B offices.
Many landlords are responding by refurbishing and re-positioning older buildings to meet occupier expectations around energy performance and amenity. Projects such as Wessex Fields (Bournemouth) and The Port House (Portsmouth) illustrate how investment in sustainability and specification can deliver renewed interest.
Occupiers are also increasingly asking for flexibility, both in lease structure and design, with collaborative space, wellbeing amenities and access to transport links now seen as essentials rather than extras.
Industrial & logistics: From boom to balance
The industrial sector continues to perform well, even as the extraordinary post-pandemic momentum begins to normalise. Take-up across the South Coast remains healthy, with demand underpinned by e-commerce, trade-counter and advanced-manufacturing occupiers.
However, supply remains tight, particularly for units above 50,000 sq ft. New development is limited by land availability and rising build costs, which in turn are supporting rental growth. Prime rents for new-build units are typically around £14 – £15 per sq ft across Southampton and Portsmouth, and approaching £12 per sq ft in Bournemouth and Poole.
The report notes a clear shift toward occupier selectivity, focusing on specification, efficiency and accessibility. Tenants are prioritising BREEAM-rated and EPC A/B-rated units, while landlords are exploring low-carbon retrofits to stay competitive.
For investors, the message is one of disciplined opportunity: assets in the right location with strong ESG credentials continue to attract interest, even as yields have softened slightly amid higher financing costs.
Retail: Stabilising, repurposing and redefining
After several challenging years, the South Coast retail market is showing early signs of stabilisation. Prime rents and occupancy levels have largely stabilised following rebasing, and consumer footfall has proved resilient in the region’s stronger centres.
Leasing activity in flagship destinations, including Westquay (Southampton) and Gunwharf Quays (Portsmouth), remains healthy, with new openings from Garmin, Mango, New Balance and Omnes during H1. Retailers continue to favour “drive-to” formats and experiential destinations that complement online channels.
Meanwhile, the region is leading in town-centre repurposing. The report highlights several landmark regeneration projects:
- In Southsea, the former Debenhams is being transformed into a residential-led mixed-use scheme with GP surgery, gym, vet and commercial space.
- In Bournemouth, the former Beales department store is being redeveloped into 130 apartments alongside leisure and workspace.
- In Southampton, the Bargate Quarter scheme will deliver 519 homes and 400,000 sq ft of commercial space.
These examples reflect a broader evolution, a shift away from mono-use retail towards mixed-use, experience-driven environments that bring people back into city centres.
