Survey assumptions
The PMA/PAI Property Survey, first carried out in December 1981, now covers some 80 centres throughout the UK excluding London.(*) The current survey is based on information collected as at December 1985 and makes a comparison with December 1984 and December 1983 data. Rental growth has been calculated after taking into account centre size by “weighting” the centres according to their stock of commercial and industrial floorspace. Because such figures are not available for Scotland, the figures for rental growth are restricted to England and Wales.
Rental growth
The retail market has continued to outperform the office and industrial markets in terms of average weighted rental growth over the period December 1984 to December 1985. The retail market achieved an absolute growth rate of 10.7%, representing a real growth rate of just under 5%, thereby being the only market to achieve real rental growth. However, this represents a markedly lower rate of growth than that achieved in the previous year, to December 1984 (when the respective figures were 14% in absolute terms and just under 9% in real terms).
The industrial market similarly performed less well in the year to December 1985 than in the year to December 1984, the absolute growth rate declining from about 5% to 4% (in real terms a decline from fractional real growth to a decline of 1.7%).
Offices performed slightly better than the other two markets in terms of managing to achieve more or less the same absolute growth rate in the year to December 1985 as in the year to December 1984. However, owing to a higher rate of inflation during 1984-85, in real terms the rental growth performance worsened, real growth falling from – 0.6% to – 1.4%.
An analysis of rental performance by comparing the percentage of centres experiencing rental decline, those experiencing no change in rental levels and those with rental growth, is illustrated in the table below. This reinforces the earlier results, which showed that the retail market performed best over the year to December 1985; it has the greatest proportion of centres experiencing rental growth, and none at all experiencing rental decline. In comparison with the same analysis for the year to December 1984, the decline in retail rents experienced in some centres then has disappeared, while the pattern for both the office and industrial markets is similar, with a slight reduction in the proportion of centres experiencing rental growth but no significant change in the proportions with falling rents.
(*) The PAI/PMA Property Survey is based on information collected regularly by the 39 member firms of Property Agents International and analysed by an independent consultancy, Property Market Analysis. Further details of this survey can be obtained from PAI at Vernon House, Sicilian Avenue, Holborn, London WC1A 2QH, or from PMA at 9 Broad Court, Long Acre, Covent Garden, London WC2B 5QN.
