CITY OFFICE RENTAL VALUES FALL FOR SECOND MONTH IN MAY
Capital values across UK commercial property increased 0.4% in May 2017 according to the latest CBRE Monthly Index. The national average was pulled up by Central London offices, where capital growth was the result of yield movement. All property rental values increased 0.1% over the month.
The Office sector recorded capital values increasing by 0.6% on average in May, boosted by West End and Mid Town offices where capital values increased by 1.1% over the month due to yield movement. Rental values increased by 0.1% overall in the Office sector. City office rental values fell -0.1% for the second month, while Outer London/M25 offices boosted the national average with rental value growth of 0.3%.
Retail capital values increased by 0.3% across the UK in May, pushed up by the 0.6% increase reported by Retail Warehouses. High street shop capital values rose 0.2% over the month. For the second consecutive month, Shopping Centre capital values fell -0.1%. Rental values were stable for the month. South East high street shops reported rental values declining -0.1%.
Capital value growth in the Industrial sector slowed slightly to 0.5% in May from 0.6% in April. While Industrials in the Rest of UK reported capital value increasing 0.2% over the month, South East Industrial capital values rose 0.6%. Rental values in the sector increased 0.2% in May, driven by South East Industrial performance of 0.2%. Industrials in the Rest of UK recorded stable rental values.
This was largely another steady-as-she-goes month for UK commercial property, with capital growth and total returns at respectable levels, but driven by yield movements rather than rental growth. For the second successive month, City offices reported a modest fall in rental values. However, the run-up to today’s General Election seems to have had no noticeable effect.