UK prime commercial rents crept up 1% prior to Brexit vote

UK prime commercial rents crept up 1% prior to Brexit vote
4th August 2016 MorleyRichesAblewhite
In Uncategorised

Morley Riches and Ablewhite have witnessed a stable commercial property market during the second quarter in a period of significant political and global change and uncertainty caused by Brexit.

This is discussed in more detail in the article below by Property Week.

Rents across the UK’s prime commercial property rose 1% in the second quarter of 2016, boosted by near-record levels of rental growth in Central London shops.

Research from CBRE shows the sector remained stable through uncertainty around the EU referendum, as capital values remained flat overall.

Rents grew significantly across several sectors during the quarter, with high street shops and industrial rents rising 2.8% and 1.4% respectively.

Central London saw the greatest rental growth among high street shops, with rents increasing by 8.9% over the last quarter compared to 0.2% rental growth in shops across the rest of UK.

A third of the tracked locations in Central London saw rent increases over the quarter, showing that retailers are still willing to pay premium rents for the limited stock available in the most sought after streets of the capital.

Prime yields remained almost flat during the quarter, rising by 4bps to remain close to 5.4%. Yields from prime shops and shopping centres remained unchanged over the three months, while the office sector also saw little yield fluctuation, ticking up 1bp.

Miles Gibson, head of UK research at CBRE, said: “The second quarter wasn’t exactly business as usual for the UK’s political and economic landscape, but despite the heightened uncertainty in the run up to the referendum vote, the commercial property sector demonstrated strong underlying health, with yields largely unmoved in core markets.

“In particular, ample demand for commercial space pushed up rents nationwide, especially in prime London retail, which saw some of the highest rental growth on record. The capital is open for business, and remains an attractive proposition for occupiers seeking to locate in a world leading global city, and investors and landlords capitalising on this desire.

“Although the shadow cast by Brexit means rental growth is unlikely to grow at this pace next quarter, the UK is well positioned to capitalise on the demand for new space.”

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