Commercial property slows during Easter and bank holiday lull

Central London offices joint top performing sub-sector as total returns weakened in April

Article posted: 11 May 2011

The boost received by commercial property in March was not sustained into April, as investment transactions were put on hold over the Easter and bank holiday breaks, causing a slowdown in performance, according to the latest CBRE Monthly Index.

At the All Property level, there was a minor positive capital gain of 0.1% in April, with total returns of 0.6%, as all three of the major sectors saw total returns weaken significantly on March’s results.

There was regional divergence in performance in April, especially in the office sector where the marked difference between the strong market for office space in Central London and weakness in the regions was very apparent. Central London saw total returns of 0.9% as values increased by 0.4%, the strongest subsector, whilst offices in the M25 / Outer London and rest of UK markets saw values continue to fall.

Nick Parker, Senior Analyst at CBRE, said: “It is unsurprising given the extended Easter and bank holiday breaks that investment markets eased in April. This has led to a very flat market with momentum lost from earlier in the year. It is only Central London that appears to buck this wider trend, thanks largely to rapidly rebounding occupier markets, with rents up 2.7% this year.

“Whilst office markets in Central London power ahead, elsewhere in the UK, occupier markets continue to struggle. Rents continue to decrease in both the M25 and regional markets, but it is shopping centres where the largest rental corrections have occurred this year, with rents down 1.1 per cent. This perhaps reflects the current reluctance of occupiers to expand against a background of ongoing uncertainty and retrenchment by UK consumers.”

Download the CBRE monthly index here

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Posted by Sara