The fall in commercial property capital values slowed to 0.1 per cent, while rental values rose by 0.2 per cent in March 2024, according to the latest CBRE UK Monthly Index. Total returns rose to 0.4 per cent in March compared with 0.2 per cent in the previous month.

Retail capital values rose by 0.4 per cent in March, the first monthly rise for the sector since May 2023. The increase was driven by Retail Warehouses, where capital values rose by 0.6 per cent. Capital values also increased 0.1 per cent for Standard Shops. Rental value growth for the Retail sector was steady at 0.1 per cent, while the total return rate was 1.0 per cent in March. Retail Warehouses posted the highest total return at 1.2 per cent, with Standard Shops at 0.7 per cent and Shopping Centres at 0.4 per cent for the month.

Office total returns were flat in March 2024, but capital values continued to fall. A decrease of 0.5 per cent month-on-month at the sector level reflected a fall of 0.3 per cent in Central London office capital values, 0.2 per cent in Outer London/M25 capital values and 0.7 per cent in Rest of UK capital values. These falls were caused by further outward yield movement in the office sector, as rental value growth for offices was 0.1 per cent in March.

Industrial capital values rose by 0.1 per cent in March after remaining unchanged in the previous month. This reflected a mix of fortunes at the regional level. South East industrial assets recorded an increase in capital values of 0.2 per cent, but capital values fell by 0.1 per cent for industrial assets in the rest of the UK. However, both the South East and Rest of UK segments saw rental values rise, with growth of 0.5 per cent for the industrial sector as a whole. The total return for the industrial sector was 0.5 per cent in March 2024.

Jennet Siebrits, CBRE’s Head of UK Research, said: “The results for March are more positive than we have seen for some time, in what has been a challenging period for UK commercial real estate. Yet, some parts of the market remain weaker than others, with capital values having fallen once again for shopping centres and offices. While the outlook is improving, the timing and scale of interest rate cuts could be critical to whether we see a more sustained recovery in real estate performance over the next few months.”