Capital values for retail parks have stayed flat during February, hinting that values are “beginning to bottom out” for some retail sub-sectors, according to CBRE.
For the first time since February 2018, retail warehousing displayed no movement in capital values during the month, according to CBRE’s latest monthly index.
The retail sector reported an overall 0.6% fall in capital values during February. CBRE highlighted this was a “smaller fall” than in any month of 2020.
Retail rental values declined by 0.5% over the month, and high street shops in the South East posted a 0.1% decrease. Total returns for retail stayed flat in February.
Toby Radcliffe, research analyst at CBRE, said: “With retail warehouses reporting no fall in capital values in February it is possible that values for some retail sub-sectors are now beginning to bottom out.
“Whether this levelling off in retail value decline materialises will be something to watch in the next few months as lockdown restrictions ease.”
On the whole, commercial property capital values edged up by 0.2% in February. Rental values were unchanged over the month, while total returns stood at 0.7%.
Capital values for offices were flat during the month. Offices in outer London and M25 was the weakest performing category, with values down by 0.9%. City offices inched up by 0.1%.
Office rental values rose by 0.1% in February, driven by central London locations where values similarly grew by 0.1%. Office total returns were 0.4% for the month.
CBRE noted that industrials returned to stronger capital growth after “a slight dip in the pace of growth” in January.
Industrial capital values rose by 1.3% in the period. The sector’s rental values increased by 0.5%,while total returns stood at 1.7%.
Radcliffe said: “In February property values returned to positive growth after the small decline we saw in January.
“This was the result of both strong industrial performance and a smaller decline for retail than we have become accustomed to in recent months.”
To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette
