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CBRE Monthly Index: Retail & Industrial Deliver Capital Growth Increase

Data from leading global real estate firm CBRE has revealed that capital values across the UK commercial property sector saw the greatest monthly increase in 7 years.

As revealed in the July 2021 edition of CBRE’s Monthly Index capital values rose by 1.0%, the largest monthly growth rate since December 2014.

In July, rental values rose 0.2%, while total returns were 1.4%. Unsurprisingly, following the lifting of COVID-19 restrictions, the Retail sector saw a large spike in activity, resulting in capital values rising to 1.1%. CBRE states that the rise was driven by growth in all retail subsectors apart from Shopping Centres, which posted a capital growth of -0.3%.

The strong month for Retail capital values was boosted by a 2.1% capital growth for Retail Warehouses, a record monthly increase for the subsector. This strong Retail Warehouse performance was reflected around the country and not just in one region.

CBRE UK Monthly Index Snapshot: July 2021

As shown in the image above, the Office sector saw capital value growth of 0.2% over July. However, most of this growth was outside of Central London as inside the centre of the capital values were flat with 0% growth.

Offices in the Rest of the UK stood out, increasing 0.3%, compared to -0.2% in June. However, CBRE states that this was “driven by a limited number of strongly performing assets”, which boosted the subsector’s average.

The industrial sector showed a positive capital value growth at 2.0%. However, this figure is slightly down from the 2.3% seen in June.

Following the trend set by offices, industrials in the Rest of the UK saw stronger capital value growth than those in the South East, with increases of 2.4% and 1.7%, respectively, illustrating the strength of interest in the sector across the country.

Commenting on this months figures, CBRE Research Analyst Toby Radcliff said: “The recent rebound in values has continued at an accelerated pace in July. Positively, the growth in values seems to be relatively robust with increasing capital values across Retail, Offices and Industrials.

“This [the positive growth] represents the first month to post rising values in all three sectors since October 2017. July’s strong All-property performance was further boosted by a record-breaking performance from Retail Warehouses, which is fast becoming the sector to watch.”

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