CBRE UK snapshot: shopping centre rents grow for first time since March 2018

CBRE’s latest UK Monthly Index Snapshot found shopping centres reported a rental value increase. Albeit only 0.1%, that is the first increase since March 2018.

Rental growth for retail warehouses remained flat over the month.

Meanwhile total returns for the retail sector were 1.3%. Capital values for the retail sector increased 0.8% driven by retail warehouses, which rose by 1.2% in value.

Shops in the South East performed slightly better than shops in the rest of the UK reporting a capital value growth of 0.4% and 0.1% respectively.

All property
For all real estate sectors combined there was a positive overall result.

Capital values increased 1.1% across all UK Commercial property. Rental values rose 0.5%. Total returns were 1.5%.

Offices
The office sector posted capital value growth of 0.7% driven by outer London and M25 Offices (0.8%) and offices in the rest of the UK (1.0%). Capital values for Central London offices increased 0.4%, although this figure was impacted by negative capital growth for city offices (-0.2%).

Rental values increased 0.2% for the office sector. Rental growth was predominantly driven by the rest of the UK offices segment, which reported growth of 0.5%. Total returns for the sector were 1.0%.

Industrial
Industrials capital values saw positive growth albeit at a reduced rate of 1.3%, down from 1.9% in April and 3.0% in March. Industrials in the South East performed marginally better than industrials in the rest of the UK with values increasing 1.4% and 1.3% respectively. Rental values increased 0.8% over the month. Industrial total returns were 1.6% in May.

Marlyn Chantre, research analyst, said: ‘The results of CBRE’s May Monthly Index shows that All-Property capital growth continues to be driven by industrials and retail warehouses. While the rate of capital growth slowed down over the last three months, Industrials remained the strongest sector in terms of rental value growth.'