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UK prime commercial property rental values increased by 0.4% in the final quarter of 2016, the lowest quarterly growth in 2016, according to CBRE’s latest Prime Rent and Yield Monitor. Prime yields remained relatively stable across the main sectors in Q4. Prime rents grew by 3.7% over 2016 as a whole, down on growth in 2015 of 5.0%, with Q1 and Q2 making the most significant impact on the full year.

The Industrial sector saw the biggest increase in rental values in Q4 2016, with prime rents growing 1.1% over the quarter. London and North West industrial prime rents outperformed all other locations, increasing by 2.8% and 2.7% respectively. The Industrial sector recorded the largest increase in prime rents over the whole of 2016 (6.5%), closely followed by high street shops (5.4%). Rents in high street shops rose 0.3% in Q4. Shops in Scotland saw rents grow by 2.9% over the quarter compared to the 0.5% increase across the Rest of UK (excl. South East and Eastern). The Office sector experienced no increase in prime rents.

Overall, prime yields remained relatively stable over Q4 2016, falling by just 1bp to 5.4%. Yields for prime offices and retail warehouses were unchanged over the three months. Prime shopping centres and industrials also saw little yield fluctuation, ticking up 2bps and down -1bp respectively. On average high street shops prime yields fell by -7bps, with West Midlands shop yields decreasing -26bps. Across all UK prime commercial property, yields increased by 11bps on average over 2016.

Miles Gibson, Head of UK Research at CBRE
Despite 2016 being characterised by uncertainty in the UK’s political and economic landscape, prime commercial property sector has again shown its resilience with positive, albeit easing, growth in prime rents across all main sectors. The Industrial sector in particular has helped steady the ship throughout 2016, outperforming the national average in every quarter. 
Miles Gibson, Head of UK Research at CBRE
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Lucy Sulkin
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