UK commercial property off to a subdued start in 2019

UK Commercial property capital values fell marginally by -0.1% in January 2019, according to the latest CBRE Monthly Index. Rental values were flat over the month. Total returns turned positive, recording 0.3% in January.

The Retail sector experienced a -0.7% fall in capital values and -0.2% fall in rental values in January 2019. Capital values, rental values and total returns were all negative for the fifth consecutive month. Shopping Centres recorded a fall of -0.6% in capital value over January while total returns were -0.1%. Retail warehouses experienced positive rental value growth for the first time since July 2018 (0.1%) but still recorded a -0.8% fall in capital values in January 2019.

The Office sector was stable in January 2019, recording capital value growth of 0.1% and total returns of 0.5%. Rental values remained flat. The City and West End & Midtown markets both experienced marginal improvements in total returns, as capital values remained relatively flat. Capital values in Outer London & M25 offices were also flat. For the Rest of UK offices capital values (0.3%) and total returns (0.8%) outperformed.

While remaining the star performer of the asset classes, January 2019 saw the Industrial sector experience its lowest monthly growth in capital values (0.3%) since October 2016. In the South East there was capital value growth of 0.4% and total returns of 0.7%. Rental values increased 0.2% over the month.

Robin Honeyman, Research Analyst at CBRE UK
"A typically slow start to the year, January’s results were a subdued continuation of the trends seen throughout 2018. Crunch time for Brexit, ongoing turbulence in the Retail sector and continued demand for Industrial space will all contribute to an eventful year ahead."
Robin Honeyman, Research Analyst at CBRE UK