Prime commercial property rental values in the UK increased by 0.8% in the first quarter of the year, the latest prime rent and yield monitor from CBRE shows. But despite the rise in rents, prime yields fell slightly by 4bps across the UK commercial property market in Q1 2017.
In the first three months of the year, rents in the industrial sector grew by 3.3% and for the second consecutive quarter recorded the largest increase in prime rental values of the main sectors, with prime rental values for industrial property in the South East and Eastern markets outperforming all other locations, increasing by 6.9% and 10% respectively. Industrial rents in the rest of the UK remained broadly flat.
Prime rents in the office sector fell by 0.4%, but there was a notable regional difference with prime office rental values dropping by 1.4% in central London, but increasing by 1.4% in the rest of the UK, excluding the South East and East.
Miles Gibson, head of UK research at CBRE, said: “Following an uncertain 2016 and with the potential for further change in the political and economic landscape in 2017, Q1 2017’s results continue to demonstrate the resilience of the prime commercial property sector.
“The quarter’s positive growth in prime rental values provides an optimistic outlook for the year.
“However, 2017 will not be without its challenges, particularly if weaker economic growth feeds through to slower tenant demand.”