The New Reality for Commercial Real Estate Management: Refinancing, Cashflow Pressure and Tenant Risk Going into 2026

As we move into 2026, commercial landlords are focusing on new strategies to strengthen Net Operating Income, portfolio-wide cost reduction, Refinancing priorities, and tenant engagement…

Market conditions across UK commercial real estate continue to tighten, borrowing costs remain relatively high and many assets financed between 2018 and 2021 are heading towards refinancing within the next 18 to 24 months.

Yields are drifting wider across several sectors, placing further downward pressure on valuations and pushing loan to value ratios closer to covenant limits.

Lender appetite is cautious, and scrutiny on covenant compliance has increased noticeably. For commercial property owners, landlords and asset managers, the move into 2026 requires a clear understanding of these pressure points and early preparation.

 

Where debt markets are today

Debt markets today are defined by higher margins, stricter covenant standards and a renewed emphasis on income resilience. Higher refinancing costs are already compressing cashflow, with banks focusing heavily on tenant stability, lease duration and upcoming capital expenditure.

With lower valuation assumptions creating additional tension on LTV thresholds, out-of-the-box solutions to maximise asset performance are now essential. QuoinStone’s Incremental Income strategy provides one of those solutions to strengthen Net Operating Income by identifying overlooked revenue opportunities in existing spaces, including car parks, roof tops, and communal areas. You can read more about this strategy here. Because we are owners ourselves, we have the right mindset to create and implement strategies that really work.

Portfolio wide cost reduction is equally as important to factor in. Regular and intrinsic scrutiny of energy costs, void property costs, professional fees is required to maintain positive NOI.

Debt maturities are concentrated in 2026 and 2027 which creates a refinancing hump, just as sector performance continues to diverge. Logistics remains steady, retail is mixed, and secondary offices face structural and demand related challenges. As our CIO Steve Howling notes:

 

“There is a market wide slowdown in transactions as investors watch for the continued fallout of tariff impact and the forthcoming UK Budget. However, there has recently been rekindled interest in secondary shopping centres, retail and regional offices as investors start to identify value opportunities.”

 

Heightened tenant stress, particularly among discretionary retail and SMEs, complicates planning further. Rising void risk also highlights the value of occupier solutions such as The Artist’s Window – a charity that places arts and community groups into empty office, retail and industrial units, triggering business rates relief for the landlord while generating meaningful social value for local communities. QuoinStone have recently worked with the charity to place an arts organisation across 2 vacant floors of a large office building in central Twickenham, which has been a hugely successful project for all parties.

 

Asset-Level Priorities

At asset level, business plans should now be refreshed with refinancing priorities in mind. QuoinStone can support with this – please book in a Meeting to discuss.

Rental growth assumptions, ERVs, void expectations and incentive profiles should all be revisited. Our free guide 50 Income Boosting Strategies provides commercial landlords with a list of proven strategies that make a significant increase to their annual revenue.

Tenant engagement is equally as important. Creating genuine community within multi-let assets can support lease certainty and retention. At Telephone House in central London, we run an ongoing programme of events and initiatives that bring the building to life and strengthen occupier relationships.

 

Financial Strategy Checklist

• Re-run cashflow and exit-yield sensitivity models, testing the impact of movements of plus fifty and plus one hundred basis points to understand how refinancing outcomes might shift under different market conditions.
• Prepare lender packs well in advance, including updated lease schedules, clear WAULT analysis, EPC trajectories and a fully costed cap-ex roadmap to support discussions.
• Carry out a covenant self-assessment covering ICR, DSCR and LTV positions to identify any areas of potential pressure before lenders request clarification.
• Identify assets that may be suitable for partial disposal or joint-venture capital to strengthen overall portfolio resilience and liquidity.
• Model worst-case void positions in order to plan for income shocks and ensure that refinancing proposals are underpinned by credible downside analysis.

 

Conclusion

As we transition into 2026, quiet preparation will beat urgent reaction as Lenders favour foresight, clarity and evidence. Now is the time to rehearse refinancing conversations and reinforce asset fundamentals. QuoinStone can support with unique expertise on all aspects of commercial asset management – you can arrange a meeting with our team to review your portfolio and next steps here.