The commercial property consultants CBRE UK have published their UK Monthly Index for August and it will make poor reading for landlords in the commercial property sector. The Index shows that capital values have fallen by 2.9% in the year to date with rental values falling by 0.1% in August. All Property total returns were 0.2% in August, with capital values down 0.3%.
The bright spot was the Central London market for offices where values have risen by 1.2% so far this year. Across the whole of the UK capital values for offices are down by 1.7%. This figure would have been worse if Central London had not performed so well. Outside London the Index shows that the retail sector remains subdued, with weakened demand from occupiers softening values, down 0.4% in August and by 4.1% for 2012 so far. Some of our current residential clients think about diversifying into the commercial sector but it looks as though that would be a brave move at the moment.
The explosion in internet shopping has changed the retail landscape and most high streets have a high percentage of their shops standing empty. Finding a tenant is very hard indeed and desperate landlords are resorting to all manner of incentives to attract someone to take on a lease. In and around most towns one sees plenty of empty office space and it is impossible to know when the demand from potential tenants will really start to pick up. In the meantime the owners of empty commercial properties have to pay the running costs- not a particularly enticing prospect for a would be investor in this sector of the property market