July 22, 2013
Green shoots detected for UK regional office rental markets
There is evidence of improving fortunes for the UK’s regional office markets, latest figures suggest. CBRE has revealed national rental value grew by 1.7 per cent over the second quarter of this year with offices across all UK regions performing well, and none recording a drop in rents. The highest rate of rental growth over the last twelve months, as we reported earlier this month remains that of Central London at 5 per cent (and 1.7 per cent for the last quarter), but a number of the regions outside London and the South East have started to record rental growth for prime offices, whereas until recently the general trend has been down.
The survey of prime rents and yields for the second quarter of this year shows that overall, UK commercial property rents grew by 0.7 per cent over the second quarter, continuing the strong rental growth seen in the first quarter of the year.
Rental growth and falling yields have been a feature of the market in London and the South East for some time now, but Q2 2013 has been the first to see this recovery extend to a range of other UK regions. In the retail sector the divide between London and the South East and the rest of the UK is still evident, however, industrial property rental values remained flat across the country, but there was a slight downward movement in yields.
Aleksandra Starczynska, Analyst, CBRE Research, said: “These results show that a more widespread recovery in the UK property market is starting to become apparent. After a long period during which rental growth and falling yields have been confined almost entirely to London and the South East, Q2 has seen more positive performance in the rest of the UK.
“This more positive trend in the UK real estate sector is in line with what is also being reported in the economy generally, through business surveys and other data.”