Capital values across UK commercial real estate fell by 0.1% in March, representing a slowdown in decline compared with the 0.2% drop in February, according to the latest CBRE monthly index.
The figures reveal mixed fortunes across the sectors, with office capital values continuing to fall, retail seeing its first increase since May 2023 and the industrial sector showing modest growth.
Capital values in the office market were down by 0.5% against the previous month. Drops of 0.3% in central London and 0.2% in outer London helped offset a 0.7% drop across the rest of the country. Rental growth stood at 0.1% while total returns remained flat.
There were also regional splits within the industrial sector, with the South East seeing a 0.2% increase in capital values compared with a 0.1% fall across the rest of the UK, equating to a 0.1% rise overall. However, both saw growth in rental values, and total returns across the industrial sector stood at 0.5%.
Retail capital values were up by 0.4%, with marked growth in the retail warehouse sector of 0.6%. Combined retail rental values grew by 0.5% in March and the total return rate stood at 1.0%, with retail warehouses posting returns of 1.2%.
Jennet Siebrits, head of UK research at CBRE, said, “The results for March are more positive than we have seen for some time, in what has been a challenging period for UK commercial real estate. Yet, some parts of the market remain weaker than others, with capital values having fallen once again for shopping centres and offices.
“While the outlook is improving, the timing and scale of interest rate cuts could be critical to whether we see a more sustained recovery in real estate performance over the next few months.”
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