Rental values across all UK commercial property rose 0.2% in March 2018, according to the latest CBRE Monthly Index. Capital values increased 0.4% on average in March. In Q1 2018 capital values increased 0.9% on average, while rental values rose 0.5%.

Retail capital values across the UK decreased -0.2% over the last month, with no Retail sub-sector reporting positive capital growth in March. Retail Warehouse and Shopping Centre capital values fell -0.1% and -0.8% respectively. Rental values in the Retail sector increased 0.1% over the month. In Q1 2018, Retail sector capital values fell -0.4%, pulled down by Shopping Centres (-1.7%). High Street Shops in the South East recorded capital growth of 0.5% in Q1. Retail rental values increased 0.2% over the quarter.

The Industrial sector again provided a boost to overall results in March. At the national level, capital values increased by 1.7% in March, driven by a 2.1% increase in South East Industrials. Capital values increased 0.9% in Rest of UK Industrials. Rental values increased 0.5% over the month, with South East Industrials (0.7%) again outperforming the Rest of UK (0.3%). Across the UK in Q1 2018, Industrial capital values increased by 3.1% while rental values increased 1.2%. The regional divergence in Industrial sector performance was also present in quarterly results. South East Industrials reported capital value growth of 3.9%, compared with 1.8% across the Rest of UK.

The UK Office sector recorded capital growth of 0.4% over the last month. Rental values increased 0.3% across the sector. Rest of UK Office rental values were flat in March, while Outer London/M25 London and Central London rental values increased 0.3% and 0.4% respectively. March was the second consecutive month of positive rental value growth in Central London after 10 months of flat or negative changes. Capital values in UK Offices increased 0.8% over Q1 2018. Central London (1.0%) and Outer London/M25 Offices (1.1%) outperformed the Rest of UK (0.5%). In Q1 2018 Office rental values increased 0.3%.

Miles Gibson, Head of UK Research at CBRE
March’s results show the usual quarter-end improvement in performance, although this boost is muted compared with March 2017. Overall, results for Q1 2018 were solid, with Industrials continuing to shine, and promising signs of a return to rental growth in Central London Offices.
Miles Gibson, Head of UK Research at CBRE