Prime yields and rents stable in Q3 – CBRE
Prime rents and yields for UK commercial property remained stable during the third quarter compared with Q2, despite the economic uncertainty across Europe, says CBRE. There were some changes by sector, however, particularly within retail, with shop rental values rising thanks to the strong Central London occupier market while retail warehouses and shopping centres saw modest falls.
Prime high street properties saw a 0.9% increase in rents overall, boosted by the 3.2% growth in shops in Central London. Nearly all other UK regions reported no growth, CBRE notes. Retail warehouses saw rents fall 0.1% while prime shopping centres were the weakest retail subsector, with rents down 0.9%.
Prime office rents edged up 0.3% overall during the quarter as demand pressures in Central London eased slightly. Prime industrial rents slipped 0.1%, with most regions seeing no change but with falls of 2.3% and 0.5% recorded for the South West and Scotland respectively. Commercial property rents on an all-property basis have risen 0.1% in the past year and were flat quarter-on-quarter.
David Wylie, Head of Economics and Forecasting for CBRE, said: “The lack of movement in either prime rents or yields over the past quarter is symptomatic of the broader uncertainly in the UK economy at present. Prime occupier markets outside of London lack sufficient demand to push rents higher while investor appetite has waned in the face of the growing uncertainty surrounding the economic outlook. Nonetheless, given the growing risk aversion among investors and renewed ‘flight to quality’, the current stability of prime rents and yields is perhaps not wholly unsurprising.”
