A Positive Start to 2025 for Real Estate, with Continued Capital and Rental Growth in January

Capital values for UK commercial real estate continued to rise during January, recording a 0.3% increase, according to the latest CBRE UK Monthly Index. Rental values increased by 0.2% month-on-month, while total returns for commercial property were 0.7%.

Retail was the best performing sector in January, recording a total return of 1.0%. Retail capital values increased by 0.4% during the month, with Shopping Centres recording a larger rise (0.8%) than both Retail Warehouses (0.4%) and Standard Shops (0.3%). Standard Shops and Retail Warehouses also recorded rental value increases of 0.3% and 0.1%, respectively, but Shopping Centre rental values did not change. As a result, Retail rental values rose by 0.1% overall in January.

Offices delivered a total return of 0.6% for January. While this was largely comprised of income return, the sector saw capital value growth of 0.1%, marking the third month in succession where capital values have increased. Both Central London and Outer London/M25 Office capital values rose by 0.1% over the month, while Rest of UK Office capital values increased by 0.2%. Meanwhile, rental values in the office sector increased by 0.2% in January.

The total return for the Industrial sector in January was 0.8%, with capital values rising by 0.4%. Total returns were higher for South East Industrials, where capital values rose by 0.5% and rental values rose by 0.4% month-on-month. In comparison, Rest of UK Industrials saw capital values increase by 0.3%, while rental values rose by 0.1% in January. Industrial rental values overall increased by 0.3% over the month.