UK Commercial Property

Remote working to hit office income by 20-25%

We think that the enforced remote-working experiment of recent months will cause a dramatic demand shift in the office sector, with as many as 50% of office-based employees working from home at least once a week. Even with a heroic supply response through substantial conversions and demolitions, we expect vacancy to rise markedly in the next five years and still…
Kiran Raichura Senior Property Economist
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UK Commercial Property Update

Can urban logistics fill the void in cities?

The acceleration of structural shifts is likely to result in some conversion of retail and to a lesser extent office space to urban logistics use. However, we think these conversions will be relatively limited given the significant shortfall in values between existing uses and industrial.

9 June 2021

UK Commercial Property Data Response

IHS Markit/CIPS Construction PMI (May)

Construction output rose further above pre-virus levels in May despite growing shortages of contractors and materials, and high cost inflation.

4 June 2021

UK Commercial Property Data Response

Lending to commercial property (Apr.)

We think a reduced willingness by lenders to allow for further payment holidays probably explains the sharp fall in net lending to property in April. Looking ahead, we expect subdued transaction volumes in 2021 and a weak appetite to lend will mean that net lending stays weak in the coming months.

2 June 2021

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US Commercial Property Data Response

US Metro Employment (Apr.)

Employment growth in the three-months to April was positive in all 30 of the largest metros. However, the rate of growth remains slow as labour shortages weigh on the jobs recovery. As a result, total employment in major metros such as NYC, Los Angeles and San Francisco is still down by 10% from the pre-virus peak, while Boston and Chicago have not fared much better.

2 June 2021

US Commercial Property Update

Austin and Seattle set to slide down the office rankings

Although office values have held up well in tech hubs such as Seattle and Austin, they have also seen some of the largest falls in occupier demand. Further substantial reductions in floorspace by tech companies will cause vacancy in these markets to rise further. As a result, we expect rents to be some of the hardest-hit, denting capital values and causing these metros to slide down the performance rankings.

1 June 2021

US Commercial Property Update

How far could industrial yields fall?

Industrial yields look likely to reach our end-2021 forecasts by mid-year, leading us to re-evaluate the outlook for pricing. Although gains in rents and capital values are driving increased development, we think investors’ willingness to pay for solid medium-term NOI prospects will support strong demand. The result is that we think yields will fall below 3.8% this year and trend lower still in 2022.

26 May 2021
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