Across UK commercial property, capital values increased 0.3% in May, up from the 0.1% reported in April, according to the latest CBRE UK Monthly Index. Rental values were flat in May for the second consecutive month.
Retail sector capital values decreased -0.3% in May, marking 5 months of flat or falling capital growth for the sector. Overall sector performance was driven by falls in capital values of -0.3% in Rest of UK High Street Shops and -0.5% in Shopping Centres. No Retail subsector reported positive capital value growth in May. Retail rental values fell -0.2% over the month, pulled down by South East High Street Shops and Retail Warehouses where rental values fell -0.3% and -0.2% respectively.
Capital values in the Industrial sector increased 1.3% in May. South East Industrials outperformed those in the Rest of UK by some margin, reporting a 1.7% increase compared with 0.7%. Rental values increased 0.3% across the Industrial sector.
Office capital values increased 0.2% over the last month. There was a distinct regional divergence in performance in the Office sector. Capital values in the Outer London/M25 Office market were flat in May while Rest of UK Offices reported an increase of 0.6%. Central London Office capital values fell -0.2% over the last month, with both the City and West End & Midtown submarkets reporting decreases. Rental value performance in the Office sector also showed a regional divergence in May. Overall rental values increased 0.2%. Rental values in Rest of UK Offices increased 0.6% while rental values in Central London and Outer London/M25 both decreased -0.1%.
Miles Gibson, Head of Research at CBRE UK, said: “Away from the Industrial sector which has seen strong occupier and investor demand for some years, outstanding performance has been harder to come by. That performance seems to be diverging regionally, at least for offices, with London experiencing slight falls in both rental and capital values, while regional markets grew steadily.”