Spotlight on... Luton and North Hertfordshire

Throughout 2025, the commercial property landscape in Luton and North Hertfordshire has entered a period of recalibration. As businesses continue to adapt to post-pandemic realities and shifting consumer behaviours, the office and retail sectors are navigating structural change, economic headwinds, and evolving expectations around sustainability and flexibility. 

Despite these challenges, the region’s strategic location, transport connectivity, and development pipeline continue to underpin long-term confidence. This review highlights recent activity, trends, and the outlook across the key sectors.

Office market - resilient demand for quality, pressure on secondary stock:

In Luton, office demand remains modest but stable, led by Grade A space with strong ESG credentials. Energy-efficient buildings with modern amenities continue to attract occupiers, while older secondary assets face rising vacancy rates and growing pressure to reposition.

A prime example is the redevelopment of the former Vauxhall K Block, now Morton House. The newly refurbished property is now a superb low-carbon building with a BREEAM “Good” rating and an EPC Rating A, setting a benchmark for modernised stock in the region.

Recent transactions underline the market’s focus on quality:

•    250 Butterfield (virtual freehold) - 5,385 sq ft
•    Units 1 & 2 Imperial Court (leasehold) - 4,404 sq ft
•    The Atrium (leasehold) - 16,748 sq ft
•    900 Capability Green (leasehold) - 4,250 sq ft

Capability Green remains Luton’s prime out-of-town office location, with occupancy around 80%. Recent lettings to TUI and easyJet, totalling around 130,000 sq ft highlight its appeal. Rental levels are trending upward, reflecting solid demand for well-located, modern office space.

By contrast, Luton town centre office market remains subdued, constrained by ageing stock and limited parking. Rents typically sit 30% below purpose-built space on the outskirts of the town.

North Hertfordshire - bucking the trend:

While many regional town centres are grappling with weak demand, Letchworth continues to perform strongly. Demand from owner-occupiers is at an all-time high, though limited supply is restricting activity.

Notable recent transactions include:

•    Spirella Building - 7,702 sq ft
•    Nexus Building - 6,048 sq ft
•    One Garden City - various suites

 Retail market - selective resilience amid structural change:

The retail sector across Luton and North Hertfordshire continues to adapt to structural shifts and evolving occupier expectations. Though activity remains below historical levels due to lack of stock, occupier interest remains high, with pockets of resilience and opportunity existing - particularly for high-quality, well-located assets. 

In Dunstable, Kirkby Diamond’s agency team recently secured an anchor tenant for Ashton Square. The collaboration between Central Bedfordshire Council and Kirkby Diamond’s team has successfully completed the refurbishment of the former Wilko unit and a new lease with established retailer Boyes, signalling the start of the town’s rejuvenation.

Hitchin remains one of Hertfordshire’s strongest retail performers. The town centre vacancy rate remains below 10%, supported by strong demand from national retailers. Recent lettings, including a new site for GAIL’s Bakery, reinforce Hitchin’s reputation as one of Hertfordshire’s most desirable retail destinations – recently ranking ahead of St Albans among the best places to live in the region.

Across the region, prime, well-located assets continue to attract occupiers, particularly those focused on experience-led retail, leisure, and food & beverage uses. Collaboration between landlords, occupiers, and local authorities will remain key to unlocking further potential in 2026.

Industrial market - airport expansion driving a wave of new development:

The industrial economy around Luton is set for a major boost following the government’s approval of the London Luton Airport expansion. The project is expected to unlock a once-in-a-generation wave of investment, with over 2.5 million sq ft of new warehouse and industrial development planned across the area.

Occupiers will be drawn from the south, attracted by the new Grade A units in an excellent location, well-connected to the airport, and offering lower labour costs.

Recent developments and activity:

• A major new development at Junction 11a of the M1 will deliver 93,000 sq ft across eight industrial and trade counter units (5,000 - 30,000 sq ft) by early 2026.
• Goodman has acquired the former Vauxhall manufacturing site on Kimpton Road, and will work with Luton Council to bring forward development proposals for a mix of employment uses – with the potential to create over 1,700 jobs.
• Activity on multi-let estates remains extremely active with Kirkby Diamond completing lettings on the following estates in the last 12 months:

• Bilton Way Industrial Estate across multiple units 97,000 sq ft.
• 200 Capability Green freehold hybrid unit - 21,334 sq ft.
• Scott Road, Park Avenue and Camford Way Industrial Estates have seen multiple lettings in recent months, totalling over 65,000 sq ft.

• Additional schemes by Aviva (Toddington Road), Wrenbridge (£31.5 million project at Junction 10 of the M1), and Prologis (the redevelopment of Griffin House and the BWI site) underline the depth of investment capital flowing into Luton’s industrial market.

The combination of infrastructure expansion, and strong occupier demand – driven by tenants becoming more footloose and recognising the value of Luton’s commercial market - together with robust investor appetite, positions Luton as one of the most dynamic industrial markets in the Southeast.

Conclusion - a market in transition:

The outlook for Luton and North Hertfordshire’s commercial property market is mixed but underpinned by opportunity. Several key factors will shape performance:

•     Interest rate movements and financing costs
•     Government policy on planning and regeneration
•     Continued adoption of hybrid work and digital retail
•     Investor appetite for ESG-compliant assets

The November Budget will be a pivotal moment, as any changes in tax incentives, business rates, or infrastructure investment could influence activity in the region.

Currently, while challenges persist, the region’s strategic location, transport links, and diverse economy provide a solid platform for long-term growth. Landlords, investors, and occupiers who focus on quality, flexibility, and sustainability will be best positioned to thrive in this evolving market.