The Department Store Legacy

• After a bruising week of political and managerial sackings, Bull & Bear examine the legacy of the traditional department store as yet another House of Fraser prepares to close its doors for the last time.  

• The demise of so many department stores over the past decade threatened to leave gaping holes in the UK High Street. However, Bull & Bear are encouraged to discover how many former stores have been given a new lease of life and transformed in the process.

• The pair cite examples of legacy department stores being redeveloped into high-end residential apartments, student accommodation, offices, a hub for life sciences and even a whisky tasting experience.

• You can even try your hand at indoor-karting and urban street golf in some former department stores.  Now that has to be a silver lining!

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UK Life Sciences - Nursing a Headache?

• The news of British Land's agreement to buy Life Science REIT this week has got Bull & Bear talking about Life Sciences again.

• Despite British Land's interest, Bear believes the sector is under a bit of pressure at the moment. Venture Capital investment levels are down and big pharma companies such as GSK and AstraZeneca are focusing investment away from the UK.

• Bull thinks this may just be a passing phase, but both unequivocally agree that Government commitment to investing in the sector holds the key to kick-starting it again.

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Time to Think Small?

• Bear is having a moan about the growing imbalance between big and small businesses.

• Even though 99% of all UK companies (by number) are classified as micro or small, it seems that strategic and policy decisions are designed to favour larger organisations.

• Perfectly well-run smaller businesses (and funds) are being overlooked, abandoned, or swallowed up, in pursuit of shareholders’ ever-increasing demand for ‘Bigness’.

• When it comes to large businesses in a global context though, the UK is way down the pecking order. Our number 1 company, Shell, is only ranked 18th in the Fortune Global 500.

• Thankfully, a stronger pound recently has prevented even more (property) companies from being taken over by the Americans … at least for now.

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The Forgotten North?

• Bull had a trip down memory lane this week and has come away thinking that the North of England really does have plenty going for it.

• Perhaps Bull's biggest takeaway is just how many big, empty office buildings there are now on the main office parks across the region. As a consequence, some landlords are bailing out for whatever price they can get.

• However, the prime Newcastle city centre office market is a very different story, with rents rising 31% since the onset of the COVID pandemic. 

• The residential market is also performing well, with North East house price growth forecast to be the joint best performing region over the next five years.

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Staying Faithful to the Regions

• Bull is unimpressed by the underhand conduct of the former Shadow Justice Secretary, Robert Jenrick, who was rightly banished this week from the Conservative Party.  

• Bear is rather more sanguine about the behaviour of some of our more self-serving politicians.  But he agrees they'd make excellent candidates for the next series of the Traitors.

• After putting politics aside, the pair focus in on the UK Regional office market, which Bull is convinced is primed for growth in 2026.

• Bear doesn't believe that strong prime rental growth in the Big Six centres paints a true picture of the wider market.  But, when the pair dig a little deeper, they do agree that the limited pipeline for new-build offices now provides a window of opportunity to refurbish existing office buildings and capture significant rental growth (and value) in the process. 

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2026 Highlights

• Bull has created a calendar detailing the key events affecting the property world in 2026. This prompts a lively discussion around the really important events that will influence how the year unfolds.

• Bull points to changes to the NPPF and multiple predicted interest rate cuts as signs for optimism.

• Bear, who has already predicted that it will be another drab year, believes the recent events and murmurings coming out of the US might compound this further.

• The two agree that the first part of this year will undoubtedly be slow, but both have their fingers crossed that things could turn around for the second half of the year.

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Year-End Appraisal

• Bull is in the doghouse for his consistently over-optimistic market projections for total returns in 2025.

• His 10.5% forecast at the beginning of the year has proven to be way above the current IPF Consensus of 7.1%.

• Bull is happy to blame everyone (other than himself) for his over-exuberance and is stubbornly unrepentant.   

• Bear compares the state of the current market with the 1990s and predicts a grey outlook for the next 5 years. Neither good, nor bad. Just grey.

• Despite everything, the spread of their respective 5-year total return forecasts, at 8.00% to 10.50% is surprisingly close … and positive.

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Taxing Times

• With The Ashes seemingly over following Australia's dominant performance in Brisbane this week, Bull has already moved on to plotting England's routes to World Cup glories at the Football and Rugby World Cups in 2026 and 2027 respectively.

• Bear finally manages to drag Bull away from his new World Cup wallcharts and they continue their discussion from last Sunday about the Budget and, in particular, they focus on the likely impact on the housing sector.

• They feel that the Government missed the chance to properly support the sector and unlock much-needed development. Targeted support at the entry level could have made a big difference, particularly given that the OBR expect further falls in housing net additions through to 2027.

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Leaks, Glitches and a Sigh of Relief

• After months of anticipation, speculation, and leaks Bull & Bear are relieved that Budget day is finally behind us.

• The Chancellor has gone big on spending and even bigger on taxes, but she has at least doubled her fiscal headroom, prompting a sanguine response from the market.

• Bear is pretty miffed by Ms Reeves's new 'Mansion Tax' and is less than impressed that rates liabilities for larger commercial occupiers, including retailers, are set to sky-rocket after the imposition of a new 'super multiplier'. 

• However, Bull takes a more measured approach to dissecting the Budget, focusing instead on the big picture implications for the UK property sector.  If the Chancellor has indeed managed to calm the markets and pave the way for lower inflation, the Bank of England are increasingly likely to deliver a 0.25% cut in interest rates in December, with further cuts in 2026.

• That may be just the early Christmas present the UK property market needs!

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UK Healthcare - In Rude Health?

• Bear fears the Chancellor might come after pensioners in Wednesday's Budget, leading our protagonists to chew the fat on UK Healthcare Property. 

• The UK's ageing population and clear need for additional healthcare infrastructure is causing a wave of investment into the care sector, from a variety of sources.

• Bear is quick to highlight why this wave might cool off over the next few years - #1 being development unviability.

• The two agree that it falls on the Government's shoulders to create a more forgiving economic environment for development, but neither are optimistic Wednesday's Budget will provide the solution.

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The Power of One

• Whilst Bull is 100% convinced that the Bank of England will cut rates by 0.25% in December, Bear is particularly gloomy this week.

• Other than London, he is concerned that the ongoing bid-ask spread between buyers' and sellers' expectations is stifling activity.

• He fears that the banks' apparent 'pretend and extend' strategy on current valuations will ultimately backfire and he offers two unpalatable solutions:

• Slash capital valuations by another 10-15% to reignite enthusiasm; or

• Do nothing and endure the market drifting for the next 5 years.

• He would opt for the former ... and he thinks the market may well agree with him, sometime in 2026.

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Padeling in the Wharf

• Having spent a highly enjoyable Thursday afternoon at the Trident padel tournament, Bull is keen to share with Bear just how impressed he was with Canary Wharf. 

• Canary Wharf Group has invested heavily in diversifying the area, introducing more residential units, upgrading retail spaces and enhancing leisure facilities. They have now created a 24/7 destination where people can live, work and thrive.

• Office leasing activity in Canary Wharf has risen sharply this year, with the availability of space falling to its lowest level since 2018. The widening delta between prime office rents for top space versus the City and the West End means this demand is expected to continue.

• Enjoy your Sunday.

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House of Horrors

• After a night of Halloween horrors, Bear reviewed the Q3 2025 transaction volumes and is feeling gloomy about the inertia in the UK property market, which appears to be haunted by the spectre of Mrs Reeves's November Budget.

• Bull, however, is convinced that the final quarter of the year could mark a step change in activity, with a number of £100m plus deals in the London office market poised to complete.

• With UK property set to deliver total returns of 7.4% pa 2025 and 8.4% pa in 2026, Bull also believes that property could deliver on the upside and is buoyant about the prospects for the other sectors.  

• We may not escape the Autumn Budget unscathed, but there is momentum building in the market just waiting to be released.  

• Enjoy your Sunday.  

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Playing the Long Game

• Bull & Bear are discussing a slightly lesser-known long income alternative to traditional sale & leaseback deals that form part of many long income funds - income strips.

• Bull is initially apprehensive. He thinks they are fundamentally a bit boring and has worries about inflation outpacing market rental growth.

• Bear persuades him that given prevailing market conditions, income is king, and the sizeable margins over gilts makes long income products an attractive alternative to active property right now.

• Bull & Bear are having a week off next weekend for Half Term and will return on the 2nd November.

• Have a good Sunday.

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