The pace of capital decline in the UKcommercial property market slowed for the second consecutive month in February, with values falling by a further 3.08%, according to the IPD UK Monthly Index. The latest monthly fall brings the total peak-to-trough decline in commercial property prices, since June 2007, to -39.5%.

The pace of capital decline in the UKcommercial property market slowed for the second consecutive month in February, with values falling by a further 3.08%, according to the IPD UK Monthly Index. The latest monthly fall brings the total peak-to-trough decline in commercial property prices, since June 2007, to -39.5%.

'With only the slightest attenuation in the pace of capital value falls, the re-pricing cycle continues to run its course, now close to a 40% overall write-down,' noted Ian Cullen, co-founding director at IPD. 'Perthaps the most notable feature of the February results, however, was the further weakening in Office rental values, recording over three times the drop of the other major sectors.'

For the third consecutive month, capital value falls in the Retail sector led the way, with a drop of 3.35%, followed by Offices and Industrials at -3.03% and -2.53%, respectively. Income returns remained level with January, at 0.61%, itself a high since October 2002, contributing to negative total returns in February over the whole Index of 2.47%.

Despite robust income returns, rental levels continued to slide through February, falling by a further 0.93% - the sharpest single month movement so far in this recession. The Office sector fell by 1.74% month-on-month, followed by Retail, which dropped 55 basis points, and Industrials, which fell by 45 basis points.

Investment returns for UK commercial property still compare favourably to those from equities, which were -6.52%, as measured by the FTSE All Share Index, and also outperformed bonds, which returned -2.80%, according to the FT Gilts 5 - 15 Years Index.

The greatest deterioration in vacancy rates, measured as a rental value percentage of the overall income in the Monthly Index databank, was in industrial property, which increased by one percentage point to 15.5% in February, pushing up overall levels to 11.2% - the highest figure ever recorded and seven percentage points above the minimum recorded, at 4.2%, in March 1997.