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CBRE: Robust Office & Industrial Sectors Mitigate Retail Shortcomings

Figures produced by the global real estate firm CBRE has revealed that the Retail sector is the main cause of decreased capital values despite a positive performance for the Office and Industrial sectors.

As revealed in CBRE’s UK Monthly Index for October, capital values decreased -0.3% overall with capital values in the Retail sector, falling -1.0%.

In both 2018 and 2019, the struggling Retail sector has been beset by CVA’s and shop closures which have affected even the most high profile of brands.

CBRE’s figures make for grim reading with values decreasing across Retail Warehouses (-1.2%), Shopping Centres (-1.1%) and UK High Street Shops (-0.7%). While the high street performed better than the sectors average, Retail rental value s were down -0.4%, with total returns at -0.5%

CBRE Monthly Index: October 2019 (snapshot)

Capital growth in the Industrial sector slowed by -0.2% from September’s results of 0.3% to just 0.1% in the month of October.

According to the findings presented to Commercial People by CBRE, South East Industrials continue to outperform the Rest of the UK, with capital growth of 0.2% for October vs a -0.2% fall elsewhere. Rental values across the Industrial sector, however, did show a marginal increase of 0.1% (vs September) to bring the total returns to 0.5% for the month.

Robin Honeyman, a Senior Research Analyst at CBRE UK, said: “October’s results were again a repeat of the wider trends reported throughout 2019 so far, with poor Retail performance dragging down All UK Property results. With Year to Date returns of 5.2% and 5.8% respectively, the battle is on between Offices and Industrials as to which will be the best-performing market of 2019.”

Capital values in the Office sector meanwhile made for more positive reading with the sector increasing by 0.2% (vs September) and continuing to outperform Industrial for the fourth month.

In London, office capital values increased by 0.1% while numbers for the Rest of the UK submarkets increased to 0.4%.

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