The Intermediary – November 2025 - Flipbook - Page 80
SPECIALIST FINANCE
Opinion
Income, flexibility
and resilience
T
here’s a subtle yet
increasing confidence
within the semicommercial property
market, evident in
the rising volume of
enquiries we’re receiving supported by
the quality of assets being presented,
and the engaging discussions brokers
are having with investors. However,
as confidence grows, so does a notable
change in investor behaviour.
There’s a clear move away from
traditional commercial assets toward
semi-commercial and mixed-use
properties. This trend signals a
dynamic transformation and exciting
opportunities on the horizon.
Semi-commercial and mixed-use
assets are increasingly viewed as the
sweet spot of opportunity in a market
that still holds risk and uncertainty.
Buyers are targeting buildings with a
strong residential component, oen
alongside retail, office or storage space.
We’re seeing a rise in conversions,
student lets, and residential-led hybrid
schemes – assets that offer income
diversity, long-term demand, and
potential for value upli.
Meanwhile, the more traditional
segments of commercial property
remain challenging. Office space is
still working through the long-term
implications of hybrid working.
Retail is also under pressure, with
high street premises only viable
in targeted formats, typically
convenience retail, food-led, or
experiential uses. Larger units or
non-essential retail oen struggle to
justify investment, especially where
footfall is unpredictable. But for many
mid-sized landlords or developers, the
focus is shiing towards assets that are
more flexible, more local, and more
connected to residential demand –
such as semi-commercial assets.
Semi-commercial assets offer
more than just dual income streams,
they can also unlock more strategic
financing pathways. At GB Bank, if
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The Intermediary | November 2025
the residential portion of a property’s
rental income exceeds 55% and/or
residential value, we classify it as
a residential buy-to-let (BTL) loan
rather than semi-commercial. These
borrowers can access our BTL rates,
typically more competitive than
commercial pricing. This distinction
can significantly improve deal
economics, especially in a market
where affordability and yield remain
critical considerations.
Regional opportunities
One of the most notable developments
we’ve seen is the increased interest
in regional opportunities. Bristol,
Manchester, Sheffield and Noingham
are seeing a rise in semi-commercial
demand, particularly around
university clusters and town centre
regeneration zones. These markets
oen combine steady residential
demand with the scope for creative
mixed-use or semi-commercial
development. They also tend to come
with lower capital outlay and beer
yield potential than equivalent assets
in the capital.
The rise in demand for mixed-use
or semi-commercial property isn’t
just about asset class, it’s also about
strategy. Landlords are thinking more
holistically. Many are refinancing
existing portfolios to unlock capital
for expansion or repositioning tired
assets into new use classes.
They’re looking for lenders that
can be flexible and commercial in
their approach. Deals oen involve
layered ownership structures, limited
companies, or Special Purpose
Vehicles (SPVs) and they don’t always
fit the neat parameters of traditional
lending models.
At GB Bank, we understand the
intricacies of different structures
that investors may use. Our semicommercial proposition is designed
to reflect real-world investing. We
support limited company structures
and apply a flexible underwriting
MIKE SAYS
is CEO at GB Bank
approach to properties with mixed
income streams. Whether it’s a
conversion project, a refinance, or a
purchase, we’re open to discussing
tailored options with brokers who
understand their clients’ longerterm plans.
The broader economic outlook
is also becoming more supportive.
Aer a period of valuation resets and
cautious lender sentiment, we’re now
seeing a more stable environment.
Capital values have adjusted, yields
have moved, and transaction volumes
are beginning to recover.
Lenders are also growing in
confidence. Appetite for incomegenerating assets is returning, albeit
selectively. Properties that can
demonstrate a reliable rental profile,
clear exit strategy and sound location
fundamentals are aracting funding
more readily than a year ago.
But there’s no room for
complacency. Lending in the semicommercial space still requires a
sharp eye for risk and a willingness
to go beyond a tick-box approach.
Valuations can be more complex,
and tenant mix maers. It’s not just
about yield, it’s about sustainability of
income, quality of occupier, and asset
management potential. A partnership
mindset between broker and lender
is important. Every deal has nuances,
and navigating those requires
open communication and aligned
expectations.
Ultimately, semi-commercial
or mixed-use property is no longer
fringe. It’s moving to centre stage as
investors seek smarter, more resilient
ways to deploy capital. Brokers
who can guide clients through the
opportunities, work with lenders and
can structure the right solutions will
add real value in this environment. ●
