UK RENTAL VALUES REMAIN STABLE, WITH SLIGHT FALL IN CENTRAL LONDON
Capital value growth across UK commercial property slowed to 0.2% in April 2017 after a strong March performance, according to the latest CBRE Monthly Index. This average was once again pulled up by the Industrial sector. Rental values were stable on average for the month.
While rental values in Outer London/M25 Offices and Rest of UK Offices increased by 0.2% and 0.3% respectively, falling rental values in Central London (-0.1%) kept overall Office sector rental value growth at 0.0% in April 2017. The Office sector recorded capital value growth of 0.2% over the month, boosted by City Offices (0.5%) and Outer London/M25 Offices (0.4%).
Retail capital values increased by 0.1% on average across the UK in April. High street shops in the South East helped pull the sector average up, recording growth of 0.2%. Meanwhile, Shopping Centre capital values fell -0.1%. Rental values were stable across the Retail sector for the second consecutive month. While most segments saw no change in rental values, both high street shops in the Rest of UK and Shopping Centres reported rental values declining -0.1%.
Despite slowing performance following a stellar March, the Industrial sector continued to outperform the other main sectors in April 2017. At the national level capital values increased by 0.6% over the month. This was driven by South East Industrials performance of 0.7%, while Rest of UK Industrials recorded capital value growth of 0.3%. Industrial sector rental values increased 0.2% overall, with both South East (0.3%) and Rest of UK Industrials (0.2%) performing roughly on par with the sector average.
Rental values were stable on average for the month, with modest falls across high street shops, Shopping Centres and Central London offices. The fall in Central London rental values that many have been feeling on the ground looks to be beginning to be reflected in performance data – however, the usual caveat of this only being one month’s data still stands. That said, this small decline in Monthly Index rental values follows our Q1 Prime Rent and Yield Monitor reporting prime Central London office rents falling for the last two quarters. Data on the Central London market will be closely watched in the coming months.