Rental growth across the commercial real estate sector in Q2 slowed slightly on the first three months of the year, but continued to move in the right direction, according to the latest figures from CBRE.
The firm’s Prime Rent and Yield Monitor revealed an average all-property prime rents growth of 1.9% in Q2. compared with a 2.2% growth in Q1. Yields at the All-Property level moved in by 10 basis points during the quarter.
Industrial was the best performing sector in terms of rental growth during the period, up by 2.8%. Year-on-year industrial rents are up 15%. Offices followed, up 1.6% in Q2 and 7.1% year-on-year, with retail warehousing up by 1% in Q2 and 3.7% year-on-year.
Rental growth in the industrial market was driven by the East and West Midlands, which both delivered 3.5% of rental uplift.
While rents continue to increase, yields started to soften in the industrial sector, moving out by 2bps to 4%. This is the first softening seen since Q3 2020.
In the office sector, the East Midlands reported the largest increase in rents, up by 6% with London fringes following at 3.7%. On the investor side, the average yield for the office sector was flat. Offices in the North West reported the greatest fall in yields, moving 16bps to 7.5%.
Shopping centres were the only asset class not to see any rental growth during the period. Year-on-year rents have fallen by 1.5%, according to CBRE’s figures. Yield on shopping centres remain at 7.8%.
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