BCSC is the UK's largest business to business networking property event bringing together the best from all spectrums of the retail and retail property sectors.
Whatever your role in the retail and retail property world we look forward to meeting you at BCSC 2016. With over 50 members of the CBRE team at the conference we will have expertise from all areas of the property world.
If you are at BCSC on 14-15th September come and meet the team on Stand 07. For a full list of our delegates attending the conference, please click here.
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As we move towards the busy 4th quarter trading period, this report highlights some of the major trends seen in European commercial property markets so far in 2016. The big event in the political sphere was undoubtedly the surprise result in the UK referendum but excluding the UK, the demand for real estate in Europe has remained strong.
Of the 35 largest non-UK office markets in Europe, prime office yields have continued to fall in 22 of them so far in 2016 with yields remaining stable. The pattern of office leasing across the European markets continues to reflect the economic situation: positive but slow growth with some marked differences from place to place reflecting offsets in the timing of cycles; all tempered with a degree of caution from the lead-up to, and result of, the EU referendum in the UK.
The increased attraction of prime property is linked to the policy adopted by the ECB over the past two years. We now have negative short-term policy rates and very low long-term government bond yields. This has pushed investors towards alternative “near bond-like” assets which offer some characteristics of fixed income and security. Prime property goes some way to fitting the description and steadily rising rents and falling vacancy have helped to make the case.
The majority of retail markets across Europe have seen positive retail sales volume growth so far in 2016 and the EU average growth rate has been a healthy 3.2% .
The industrial & logistics markets have also performed well so far in 2016 even in the UK, where logistics occupier demand was surprisingly strong amidst a general referendum-linked slowdown.
Although uncertainty around the impact of the referendum will weigh on parts of the UK market, continuing economic growth and an ongoing very low interest rate environment will continue to drive real occupier and investor demand over the rest of 2016 and into 2017 despite the plethora of elections and referenda still to come.
•BOTH PRIME HIGH STREET AND SHOPPING CENTRES SEE POSITIVE BUT SLOWING RENTAL GROWTH IN Q2
The CBRE EMEA Prime High Street rent index grew by 1.81% q-o-q and 6.89 % y-o-y, however there has been a slowing of these growth rates compared to the 2.1% growth we saw in Q1. It’s a similar story with the Prime Shopping Centre index as it grew by 0.36% q-o-q and 2.28% y-o-y in Q2 slower than the 0.65% growth we saw in Q1.
•CONSUMER CONFIDENCE STABILISES IN Q2
Consumer confidence has started to recover in Q2 from the downward trend we saw in Q1. In the second quarter of 2016 consumer confidence improved moving from -7.3pts to -5.7pts. Although consumer confidence has improved and is significantly above its long term average, greater uncertainty in the second half of the year may impact consumer confidence going into Q3.
•RETAIL INVESTMENT TOTALLED €12.8 BILLION IN Q2
The UK remains the key target for European retail investment, followed by Germany; Europe’s second largest market. Regional centres led the market as assets in core markets are in short supply. The gap between prime and secondary yields remains wide as investors continue to play a risk-adverse strategy.