Quiet start to 2020 for commercial property

Across UK commercial property, capital values decreased -0.2% in January, according to the latest CBRE UK Monthly Index. Rental values were unchanged from December, while total returns were 0.3% for the month.

In January, capital growth in the Industrial sector was 0.3%. Rental values also increased 0.3% over the month and total returns were 0.7%. This solid performance is in line with figures reported throughout last year in line with that of the previous year. As was the case in 2019, South East Industrials outperformed, pulling up the figures for the sector as a whole.

The Office sector reported capital value growth of 0.1% in January. Rental values grew 0.1%, while total returns were 0.5% across the sector. Rest of UK offices continued its strong performance from 2019 with the largest rental value growth and total return of any Office subsector in January.

Retail sector capital growth was -0.7% in January, a similar fall to that seen in January 2019. Standard shops actually recorded positive growth (0.1%) for the first time in 23 months, though growth was confined to the South East. Across the sector rental values fell -0.2% and total returns were -0.2%.

2020 looks to be off to a similar start to 2019; Offices and Industrials continue their steady performance while Retail is more challenging. However, UK investment volumes in Q4 2019 surged, and it may be that this momentum will have a knock on effect on valuations with the usual lag in a few months’ time.
Toby Radcliffe, Research Analyst, CBRE