UK Commercial Property
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Are flexible offices making a comeback?

Over the last two years, serviced offices have seen more upheaval than most other real estate sectors. But there have been some encouraging signs over recent quarters and long-term trends may have moved in their favour, though we don’t expect improved fortunes for flex space will be enough to change the outlook for offices as a whole.
Andrew Burrell Chief Property Economist
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UK Commercial Property Chart Book

Annual property returns hit a seven-year high

Commercial property ended last year strongly. Annual rental growth climbed to a five-year high, while annual total returns crossed the 20% level. This was largely the result of dynamism in industrial, though all sectors saw positive annual returns, even retail. But we think it will be a struggle to repeat this stellar performance in 2022, as economic headwinds and structural changes weigh on rental growth and the scope for further yield reductions reduces. As a result, we expect returns to be significantly lower in 2022.

21 January 2022

UK Commercial Property Update

Industrial yield falls set to slow

The industrial sector had its best year in over three decades in 2021 as demand soared and supply struggled to keep up. Although we expect the sector to perform well again this year, we don’t think that yields can continue to fall at the rate seen in 2021.

20 January 2022

UK Commercial Property Update

Which assets can provide the best inflation protection?

Recent data have reinforced concerns about inflation risks in the UK. We remain of the view that property investments provide only limited long-term protection against higher prices, but of the individual asset types, we think industrial and residential are best placed to weather any surge. In view of the wider interest, we are also sending this UK Commercial Property Update to clients of our UK Housing Service.

14 January 2022

More from Andrew Burrell

UK Commercial Property Outlook

Recovery to continue, but at a slower pace

The economic recovery has stalled and the near-term outlook is softer. Meanwhile, higher inflation is expected to bring interest rate hikes as early as December 2021, though we think that the pace of tightening will be fairly gradual. The post-COVID-19 property recovery has strengthened further across all sectors. But the rental outlook remains fragile, while we expect less assistance from falling yields after this year. As a result, we are close to the peak of capital value growth and performance will be much more subdued over 2022-25. Within this, industrial remains the standout, while London offices have the weakest returns.

19 November 2021

UK Commercial Property Update

Data point to upside, but outlook still fragile

The latest real estate data came in stronger than expected. But while there have been encouraging developments, particularly in the retail sector, we think this signals a short-term boost to prospects rather than a permanent improvement.

11 November 2021

UK Commercial Property Data Response

RICS Construction Market Survey (Q3)

The latest RICS survey indicated that construction activity remained robust in Q3, while the outlook for the near term is favourable. Although we agree, we expect that building material and labour shortages, along with concerns about commercial values, will weigh on activity over the next 6 months or so.

4 November 2021
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