Prime commercial property rents continue to grow

Posted: 20th May 2016

Rents in the UK prime commercial property sector rose by an average of 1.4% in the first quarter of this year, matching the level of growth recorded in Q4 2015, the latest figures show.

Strong performance across the office, retail, warehouse and industrial property sectors helped to push rents up at the highest level of growth since 2007, according to the latest CBRE Prime Rents and Yields Monitor.

The greatest level of rental growth was witnessed in the prime industrial property sector, where rents rose by an average of 2% in Q1 – third largest quarterly increase the sector has seen over the past 15 years.

Rental growth, fuelled in part by 3.9% rental and capital value growth in London’s industrial sector, helped to ensure that yields remained stable at 6%, resulting in a capital value growth of 2.1%.

Robust demand for prime office space also contributed to the rise, with rental growth of 1.8% and capital value growth of 1.7%, led by the West Midlands where rental and capital growth of 4.7% was witnessed.

Rents and capital values also rose sharply in the prime central London office market, up 2.6%.

Chris Vydra, head of city leasing at CBRE, commented: “The sustained health of the office sector shows that businesses remain confident about the UK’s economic prospects, despite the looming European Union referendum vote. London and in particular the City, is seeing sustained rental growth, mostly driven by larger space users committing early prior to key lease events.”