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Commercial property market stays flat

Equivalent yields were unchanged over the month at 6.6%.

June UK Monthly Index snapshot:

* Capital values at the All Property level increased by 0.2% over the month, with total returns of 0.7%;
* Office returns of 1.0% were double the rate seen for both retails and industrials, which trailed on 0.5%;
* Central London offices were again the strongest performing sub-market, with returns of 1.4% far out-pacing the 0.7% recorded by second placed retail warehouses;
* Office returns continue to diverge, with strong performance in Central London contrasting with weaker returns of 0.3% in Outer London / M25 and 0.5% in the Rest of UK;
* Unusually, the retail sub-sectors also diverged in June, with retail warehouses and shopping centres producing relatively steady returns of 0.7% and 0.6%, while High Street shops fell to 0.3% following a 0.2% correction in values;
* Rental values were flat overall in June, although growth of 0.5% in Central London offices was significant in offsetting continuing declines in nearly all other market sub-sectors;
* All Property equivalent yields remained unchanged at 6.6% over the month.

David Wylie, Head of Economics & Forecasting at CBRE, said: "The continuing strength of returns in the Central London office market has largely been responsible for the 1.6% increase in capital values in the wider Monthly index over the past six months. However, the remainder of the market now appears to be lacking momentum, with transaction volumes down and occupier markets showing signs of renewed stress."

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