Central London offices outperform again – CBRE
June was a largely flat month for UK commercial property markets, according to the Monthly Index from CBRE. The overall capital growth of 0.2% and total returns of 0.7% last month were in line with those recorded in May, and most sub-markets in June saw values flat month-on-month or under slight downward pressure, the firm says.
The exceptions were the markets for Central London offices and retail warehouses, where growth in rental values drove a continued buoyant performance. Returns for office space in Central London reached 1.4% for the month, with retail warehouses producing returns of 0.7%. The strong rental growth of 0.5% in Central London offices also helped to offset falls in rental values in nearly all other sub-sectors, CBRE noted.
David Wylie, head of economics and forecasting at CBRE, said the wider market beyond the Central London offices subsector appeared to be lacking momentum, with transaction volumes down and occupier markets showing signs of renewed stress.
Overall office returns of 1.0% in June were double the 0.5% rate for the retail and industrial sectors. But within the offices sector the strong returns in Central London stood in contrast to the 0.3% returns for Outer London/M25 and 0.5% for the rest of the UK. Within the retail sector, shopping centre returns were also relatively strong at 0.6% while returns for high street shops fell to 0.3% following a 0.2% correction in values, the firm noted.
