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Commercial property market shows signs of recovery

Recent industry reports have begun to show increased optimism within the commercial property market. Figures from various surveys suggest improved market conditions that will lead to a significant recovery.

According to the most recent Autumn 2013 European Market Indicators report from global property consultancy Knight Frank, as the eurozone begins to emerge from the financial crisis, the commercial property sector is beginning to show promising signs of improvement.

The figures show that in the three months to October, commercial property market conditions remained stable with pockets of growth reported in the rental sector and rental growth expected for prime office rents throughout the upcoming quarters.

A separate report from CBRE revealed that commercial property rents in the UK grew by 0.6% in Q3 of 2013, building on the growth seen in the previous two quarters.

Rental growth within the office sector was the highest performing of the entire commercial property market for the fifth consecutive quarter. Only a small proportion of the market saw rents continuing to fall (four locations) whereas in 39 locations throughout the UK, rents increased, with the average growth now 1.8% over Q3.

Although London continues to display the highest rate of rental growth, significant improvements are now more widespread, with growth finally beginning to reach other parts of the UK.
Market figures did, however, display a somewhat divided view of the retail sector. According to the statistics, depending on the particular locations, the retail sector displayed both the fastest growth in prime rents and the largest falls in rental value.

An analyst for CBRE Research, Aleksandra Starczynska, said: “It is encouraging to see that capital value growth is spreading to a growing number of regions. The number of locations where yields are falling or rising is a barometer for the real estate market. In 2008, we could see only rising yields in 744 of the 747 locations monitored in Q4 2008. This quarter, 70% of office and industrial locations recorded falling yields.”

Julie Palmer

About the author

Julie Palmer

Regional Managing Partner

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Julie is a law graduate who qualified with Price Waterhouse in 1994. Julie joined Smith & Williamson in 1997 and became a partner in 2001. With Mike Stevenson, Julie set up Middleton Partners offices in Salisbury and Southampton, both of which are now part of Begbies Traynor.

Julie is a member of the Insolvency Practitioners Association and the None Administrative Receivers Association and is a Fellow of The Association of Business Recovery Professionals. Julie deals with all aspects of Corporate Recovery and turnaround work and takes all form of personal insolvency appointments.

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