Continued Capital and Rental Growth in February Driven by the Retail and Industrial Sectors

Capital values for UK commercial real estate increased again in February, rising by 0.2% according to the latest CBRE UK Monthly Index. Rental values rose by 0.2% month-on-month, while total returns for commercial property were 0.6%.

Retail was the best performing sector for the second month in a row, recording a total return of 0.8% in February. Capital value growth was 0.2% over the month, with Standard Shops and Retail Warehouses recording growth of 0.3% compared to 0.1% for Shopping Centres. Rental value growth was also 0.2% in February. Standard Shops saw slightly higher rental value growth (0.3%) than Retail Warehouses (0.2%) in February, while Shopping Centre rental values were unchanged.

Office total returns were 0.4% in February, with income return compensating for a 0.1% fall in capital values over the month. While capital values increased slightly for Outer London/M25 Offices and Rest of UK Offices, they fell by 0.4% for Central London Offices. Yet rental values for Central London Offices rose by 0.2% in February compared to a 0.1% increase for the other office segments. Rental values for the Office sector overall rose by 0.1% throughout the month.

The Industrial sector recorded total returns of 0.7% in February, with capital values rising by 0.3% and rental values rising by 0.3% month-on-month. South East Industrials saw capital values increase by 0.3%, while Rest of UK Industrials delivered capital value growth of 0.2%. Rental value growth during February was 0.3% in both cases.