Retail parks are back in focus for commercial property investors.

The Financial Times reports that UK out-of-town retail parks are now “effectively full,” with Savills data showing vacancy rates at a historic low of 1.8% across 407 million square feet of space. British Land has reported 99% occupancy across its retail park units, reflecting strong demand from retailers and constrained new supply.

For commercial property investors, this is a significant market signal.

After years in which parts of the retail property sector were viewed with caution, out-of-town retail parks appear to be benefiting from changing consumer behaviour, retailer demand and limited development.

However, strong occupancy does not automatically make every asset a good investment. It does make finance strategy more important.

Why Retail Parks Have Recovered

Retail property has been through a difficult period.

Online shopping, pandemic disruption, retailer failures and changing consumer habits all placed pressure on parts of the sector. High streets and shopping centres were particularly exposed in some locations.

Retail parks have often proved more resilient.

They can offer accessible parking, larger units, lower occupational costs and convenience for consumers. They are attractive to supermarkets, discount retailers, furniture stores, homeware brands, gyms and other operators that benefit from destination-based footfall.

As retailers refocus on physical stores in selected locations, demand for the right retail park space has strengthened.

Why Low Vacancy Matters

Low vacancy can support rental resilience.

If space is scarce and tenants want representation in a particular location, landlords may have more negotiating power. This can support lease renewals, reduce void periods and improve investor confidence.

For lenders, occupancy is important because commercial property lending is heavily linked to income stability.

A well-let asset with strong tenants, long leases and credible rental income may be more attractive than a property with uncertain occupancy or weak covenants.

However, vacancy is only one part of the picture.

Lenders will also assess tenant quality, lease length, rent review provisions, location, asset condition, borrower experience and exit strategy.

The Risk Of Overpaying

When an asset class becomes popular again, competition can increase.

That can push prices up and yields down.

Investors need to be careful not to overpay simply because the sector is attracting positive headlines. A retail park with strong tenants may still be risky if the purchase price assumes unrealistic rental growth or if refinancing becomes difficult later.

The key question is not “is this sector popular?” It is “does this specific asset work at this price, with this finance structure, under realistic assumptions?”

What Lenders Will Look At

Commercial property finance is more bespoke than standard residential mortgage lending.

For retail park or retail-led commercial investments, lenders are likely to review:

• Tenant covenant strength
• Lease lengths and break clauses
• Passing rent and market rent
• Occupancy level
• Location and catchment
• Asset condition
• Borrower experience
• Loan-to-value
• Interest cover
• Exit route
• Valuation assumptions
• Sector concentration risk

Where the borrower is acquiring through a company or investment vehicle, lender assessment may also include wider asset and liability position, personal guarantees and business experience.

Semi-Commercial Opportunities

The renewed interest in retail property may also affect smaller semi-commercial assets.

This could include properties with retail or commercial space on the ground floor and residential accommodation above.

These assets can be attractive because they may offer mixed income streams. But they can also be more complex to finance.

Lenders may assess the residential and commercial elements differently. Lease structure, planning use, tenant type and property condition can all affect appetite.

For investors, early advice is important because a property that looks straightforward may require a specialist lender.

Refinancing Existing Commercial Assets

The retail park story is not only relevant to new acquisitions.

Existing owners may want to review whether improved market sentiment creates refinancing opportunities.

If occupancy is strong and asset performance has improved, a landlord may be able to explore:

• Refinancing to a more suitable facility
• Releasing capital
• Consolidating debt
• Funding improvements
• Extending lease terms before refinance
• Restructuring ownership
• Moving from short-term finance to longer-term commercial debt

However, refinance options will depend on valuation, income, tenant profile, borrower strength and current lender appetite.

Bridging And Value-Add Strategies

Some investors may look for retail or semi-commercial assets that need repositioning.

This can involve refurbishment, lease re-gearing, change of use, tenant improvement or planning enhancement.

Bridging finance may be used where the asset is not immediately suitable for long-term lending, but the borrower has a clear plan to improve value and refinance or sell.

This can be profitable, but it also carries higher risk.

Investors should ensure that timelines, costs, contingencies and exit assumptions are realistic before committing.

Why Professional Advice Matters

Commercial property lending is not a commoditised market.

Two lenders may take very different views on the same asset. Some may like retail parks with national tenants. Others may avoid certain retail exposures. Some may lend against mixed-use property. Others may be uncomfortable with short leases or local tenant covenants.

A strong proposal should explain the asset, the income, the borrower, the strategy and the exit.

The more specialist the property, the more important this becomes.

The Willow View

Retail parks returning to favour is a useful reminder that commercial property markets can change quickly.

Assets that were once viewed cautiously can become attractive again when occupancy improves, tenant demand strengthens and supply becomes constrained.

But investors should avoid simplistic conclusions. Strong market demand is helpful, but finance must still be structured properly.

The best opportunities are likely to be assets with resilient tenants, sensible leverage, clear income, realistic valuation assumptions and a borrower strategy that lenders can understand.

For commercial property investors, this is a moment to review the market carefully,  not chase it blindly.

Frequently Asked Questions

Are retail parks a good investment in 2026?

Retail parks have seen strong demand due to low vacancy rates, resilient tenant demand and limited new supply. However, whether a retail park is a good investment depends on factors such as tenant quality, lease length, purchase price, financing structure and local market conditions rather than sector popularity alone.

Why are UK retail parks performing better than some high street locations?

Many retail parks benefit from free parking, larger unit sizes, lower operating costs and convenience for consumers. They are often occupied by supermarkets, discount retailers, home improvement stores and gyms, which have generally proven more resilient than some traditional high street retailers.

Can I get a commercial mortgage for a retail park investment?

Yes. Many lenders offer commercial investment mortgages for retail park acquisitions. Approval will depend on factors such as tenant covenant strength, rental income, occupancy levels, loan-to-value ratio, borrower experience and the overall quality of the asset.

What loan-to-value (LTV) can lenders offer on retail park investments?

LTV ratios vary between lenders and transactions, but commercial investment finance is often available between 60% and 75% of the property's value. The exact amount will depend on the asset, tenant profile, lease structure and borrower circumstances.

What do lenders look for when financing retail property?

Lenders typically assess tenant quality, lease length, rent levels, occupancy rates, property location, asset condition, borrower experience, debt service coverage and exit strategy. Strong rental income and long leases with established tenants are generally viewed favourably.

Is now a good time to refinance a commercial retail property?

Potentially. If occupancy has improved, leases have been extended or the property's value has increased, refinancing may allow investors to access better terms, release equity or move from short-term finance onto a longer-term facility.

Can retail park investments generate reliable income?

Retail parks with strong tenants and long leases can provide relatively predictable rental income. However, investors should still assess tenant covenant strength, local market conditions and future lease expiry dates before making any investment decision.

What are the risks of investing in retail parks?

Key risks include tenant failures, changes in consumer behaviour, rising interest rates, lease expiries, refinancing challenges and overpaying for assets during periods of strong market demand. Thorough due diligence remains essential.

Can bridging finance be used to buy retail or semi-commercial property?

Yes. Bridging finance is often used where an asset requires refurbishment, lease restructuring, tenant improvements or other value-add initiatives before qualifying for longer-term commercial finance.

What is a semi-commercial property?

A semi-commercial property combines commercial and residential elements within the same building. Common examples include shops with flats above, mixed-use investments and retail premises with residential accommodation attached.

Are semi-commercial properties harder to finance than standard commercial investments?

They can be. Lenders often assess the residential and commercial elements separately, and factors such as planning use, tenant type, lease structure and income mix can affect lender appetite and available terms.

How can Willow Private Finance help with commercial property finance?

Willow Private Finance works with a wide range of commercial and specialist lenders to help investors secure funding for retail parks, semi-commercial properties, mixed-use investments, commercial refinancing, bridging finance and development opportunities across the UK.