Q3 2021 reports the strongest capital growth of any quarter since Q1 2010 as values rebound
Capital values increased 1.6% across all UK Commercial property in September 2021, according to the latest CBRE Monthly Index. This is the highest All Property capital growth figure since June 2014. Over Q3 2021 capital growth was 3.8%, the strongest capital growth of any quarter since Q1 2010. Q3 took capital growth year to date to 6.4%. In September, rental values increased 0.3% and total returns for the month were 2.0%.
The Retail sector reported a 3.9% growth in capital values over Q3 2021, with 1.7% growth in September alone. The last time monthly growth for the sector exceeded this was March 2010. The strong September performance was driven predominantly by Retail Warehouses. The subsector reported its third consecutive month of record-breaking growth, with capital values increasing 2.9% over September. Meanwhile, High Street Shops South East posted growth of 1.4% for the month, driven by a limited number of strongly performing assets which pushed up the subsector average. In September, Retail rental values rose 0.1% taking quarterly growth to -0.3%. Retail total returns were 2.2% in September and 5.8% over Q3.
The Office sector saw capital value growth of 0.5% over September, bringing growth in Q3 2021 to 0.9%. This reflected capital growth in all Office subsectors over the quarter. Central London Offices posted growth of 0.5% in September and 0.6% for the quarter. Over the course of Q3, Offices in the Rest of the UK outperformed the sector average with capital growth of 1.3%. All Office rental values rose 0.1% in September and 0.5% over the quarter. Office total returns were 0.8% for the month taking Q3 returns to 2.0%.
In September, Industrials reported the greatest monthly capital value growth for the sector in the history of the index, with values increasing 3.1%. This took Q3 growth to 7.5%, the strongest quarter on record. Industrials South East pulled up the sector average, posting growth of 3.5%. This reflected significant value growth across a large number of assets within the subsector. Industrials in the Rest of the UK posted capital growth of 2.4% over the month. All Industrial rental value growth was 0.8% in September and 1.7% for the quarter. Total returns for the month were 3.4%, Q3 returns were 8.6%.
September was the eighth consecutive month of capital growth at the All-property level. We have seen progressively greater growth each month this quarter, with Q3 reporting the strongest capital growth of any quarter for over 11 years, illustrating that a robust rebound in values is very much underway. Total returns year to date are now into double figures at 10.7%, far exceeding the expectations outlined by the Summer 2021 IPF consensus forecast.