Office market leading three tier recovery, say Knight Frank
The office market is leading the commercial property recovery as retail continues to lag behind, according a recent report from Knight Frank.
The property firm’s UK Market Outlook June 2015 report reveals that the UK’s commercial property market is experiencing varying levels of growth, with offices surging ahead, following by industrial and then retail.
Chief Ecomonist at Knight Frank, James Roberts, said: “While in May, IPD’s capital growth index gained momentum, the improvement was not evenly spread across the sectors.”
Offices saw the highest capital growth at 1.5% and retail was the lowest at 0.2%, with all property capital growth index rising 0.8% in May, month on month, up on the 0.5% recorded in April.
Total invested amounts from January to May 2015 was £23.6bn, which is £17.8bn more than the same period from last year.
Mr Roberts commented, saying: “In the financial sector in particular, occupiers are reviewing which business functions need to be in the capital and other cities are starting to benefit.”
The report also states that UK shop vacancy has hovered around the 13% mark, in comparison to the UK office market, which is now experiencing lower vacancy levels than 2007, prior the financial crisis.
Office development has been slow to react to the demand for space, which is pushing up rents and limiting the amount of available space.
Although the commercial property market is generally enjoying a period of confidence and momentum, more development will be needed to meet the rising demand for office space.