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CBRE Monthly Index: Industrials on the Rise while Offices and Retail Falter

Figures released by CBRE earlier today reveal that despite the lifting of restrictions, the Retail and Office sectors are still suffering from a COVID-19 downturn.

As part of CBRE’s Monthly Index, Retail posted a -0.7% in rental value growth while capital values across the board fell to -0.1% across all UK commercial property in October 2020.

In October, the Retail sector recorded a -1.0% fall in capital values with both High Street Shops in the Rest of the UK and Shopping Centres performing worse than the sector average, with decreases of -1.3% and -2.2% respectively. While returns had been trending positively over the previous two months for High Street Shops, they have now returned to negative territory.

As shown in the image above, the Office sector posted capital value growth of -0.2% over the month – however, in light of a continued ‘Work from Home’ policy from the government, Central London Offices saw values decrease by -0.6% – the subsector’s largest fall since May.

One bright spell in the results; however, was the Industrial sector which reported a 1.4% rise in capital values – the greatest monthly increase for the industry since June 2018.

October was also a strong month for Industrial sector rental growth with values rising by 0.3%. Total returns for the month were 1.8%, again, the highest since June 2018.

Commenting on the findings, Toby Radcliffe, Research Analyst at CBRE, said: “October revealed weaker performance for the Office and Retail sectors than in the previous month. This comes even before the announcement of a new national lockdown had time to affect most valuations.

“However, there is some good news to come out of October. Industrials performed impressively over the month recording capital growth greater than that seen by the sector over the whole of the previous quarter. With the fundamentals remaining strong, there is no reason to believe Industrial value growth will not continue for the rest of the year despite new lockdown measures.”

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