UK commercial property capital value declines continue in October 2023

Capital values for commercial real estate declined by 0.6 per cent in October 2023, according to the latest CBRE UK Monthly Index. Rental values increased by 0.3 per cent, while total returns were -0.1 per cent throughout the month.

Retail capital values declined by 0.6 per cent throughout the month. This was driven by Shopping Centres, as values decreased by 1.1 per cent. Standard Shop capital values also fell by 0.7 per cent, with values for South East Shops and Shops in the Rest of UK decreasing by 0.9 per cent and 0.5 per cent respectively. Retail rental values rose by 0.1 per cent in October. This was due to Retail Warehouse (0.2 per cent) and Standard Shops (0.1 per cent). Shopping Centre rents remained unchanged in October. Total returns for the Retail sector were 0.0 per cent for the month.

Office sector capital values fell by 1.5 per cent in October. Central London capital values declined by 1.4 per cent, while Outer London/M25 offices recorded the largest decrease (-2.3 per cent). Rest of UK office capital values also fell by 0.9 per cent. Office rental values increased by 0.2 per cent over the month. All office segments posted rental value growth of 0.2 per cent. Total returns for the Office sector were -1.0 per cent for October.

Industrial capital values increased by 0.1 per cent throughout October. This was driven by Industrials in the South East (0.2 per cent), as capital values for Industrials in the Rest of the UK remained flat. Rental values rose by 0.5 per cent. Industrials in the South East (0.6 per cent) posted higher growth than Rest of the UK (0.3 per cent). Total returns for the Industrial sector were 0.5 per cent throughout October.

Jennet Siebrits, Head of UK Research, CBRE

Although all-property capital values continued to fall in October, rental values across all sectors remained resilient. The office sector continues to be most affected by adverse sentiment, and although Industrial capital values increased, the rate of growth has slowed.

Jennet Siebrits, Head of UK Research, CBRE