UK commercial property picks up as Central London offices demand remains strong

CBRE Monthly Index reports continued strength of Central London offices

Article posted: 08 Mar 2011

The UK commercial property market picked up in February, producing an improved total return of 0.8% and capital growth of 0.3%, according to CB Richard Ellis’ latest UK Monthly Index. This represents a marginal increase on January’s 0.7% total return, as property yields continued to nudge downwards as a result of continued investor demand.

Retail Warehouses had a strong month with a total return of 1.0% and capital growth of 0.5%, although offices in Central London remained the strongest performing sub-sector, having outperformed for the duration of the property market recovery, with total returns of 1.5% and capital growth of 1.1% in February. Investment transactions in February include the £10.2 acquisition of office space in Covent Garden by Real Estate Recovery Fund and the purchase by Azerbaijan Private Equity House of offices in Westminster.

Regional offices in UK were again the weakest sub-sector, seeing an improved total return of 0.3% after the -0.1% recorded in January but All Property rental values were flat in February, after a marginal fall in January.

Nick Parker, Senior Analyst at CBRE, said: “With both the retail and office sectors showing improved results, and industrial the only sector which saw slightly weaker returns, February’s property market performance in the UK was generally more encouraging than what was seen last month. Perhaps the most positive story is the resilience being shown in the retail sector, with all three sub-sectors producing stronger than anticipated returns, despite concerns surrounding the strength of the consumer economy.

“A worrying area in terms of recovery prospects remains the regional office markets, where despite a positive total return in February, values continue to correct. Even prime offices in the regions have seen little in the way of a recovery, unlike Central London where both prime and secondary property is enjoying a continued resurgence in values,” concluded Parker.

For breaking news relating to office space in Central London follow us on http://twitter.com/officespacenews

Posted by Sara