UK Commercial Property

What will happen to submarket rents after COVID-19?

With more hybrid working post-pandemic, the view is that office rents will be under pressure for many years. This raises questions about which locations could be more resilient and if rents in central business districts (CBDs) will perform better than elsewhere.
In view of the wider interest, we are also sending this UK Commercial Property Update to clients of our European Commercial Property service.
Andrew Burrell Chief Property Economist
Continue reading

More from UK Commercial Property

UK Commercial Property Update

Will COVID-19 shift real estate out of town?

With workers spending more time away from city centres, some expected that out-of-town offices could swing back into fashion. It is still early, but from the UK data, the evidence suggests that it is suburban retail, not offices, that is benefiting most from the home-working revolution.

15 October 2021

UK Commercial Property Update

What do the latest UK jobs data tell us?

UK employment has recovered strongly in recent quarters and is set to see further growth into 2022. This will be good news for UK offices, especially in regional cities. But with occupiers set to look beyond headcount when making their space decisions, we don’t think it will bring a turnaround in the sector.

7 October 2021

UK Commercial Property Data Response

IHS Markit/CIPS Construction PMI (Sep.)

The further drop in the construction PMI in September suggested that the recovery in construction has faltered amid a severe lack of materials and staff, spiralling costs, and softening demand.

6 October 2021

More from Andrew Burrell

Non-Euro European Commercial Property Chart Book

Scandinavia & Switzerland: Strong investor demand

Data for Q2 confirm that, as with the economic recovery, the property upturn is more advanced in Scandinavia than in western Europe. Investment activity grew strongly, even when excluding a large one-off deal.  Prime all-property capital values also rose as rents surpassed their pre-virus levels while yields declined slightly. That said, this improvement was mostly driven by the industrial sector. Looking further ahead, we expect to see some slowdown in industrial occupier demand as economic activity and online shopping behaviour normalise. As such, given our view that structural factors will weigh on the retail and office sectors in the coming years, we expect the pace of all-property capital value growth to slow in H2.

25 August 2021

UK Commercial Property Outlook

Slow and uneven revival to continue

The economic recovery has lost some momentum over the summer, but we expect that this will be a temporary setback and the backdrop will be strong into the medium term. There is growing evidence of a sustained commercial property upturn, albeit a weak and unbalanced one that is heavily reliant on the industrial sector. With the rental outlook still fragile elsewhere, we expect limited downward pressure on yields and only modest growth in capital values near term. Further out, office and retail face persistent structural challenges, which leaves industrial as the top performer, though even here capital value growth is not likely to sustain its current pace.

25 August 2021

Non-Euro European Commercial Property Chart Book

Emerging Europe: Retail rental falls still on the cards

In line with the economic recovery, there were growing signs that property markets have turned a corner in Q2. All-property rents rose on the quarter, while the all-property yield dipped on the back of lower industrial yields. On an annual basis, industrial rents rose, while retail rents fell less sharply. Our forecast for the economic recovery to continue in H2 bodes well for occupier and investment activity. But we still expect the retail sector to struggle. Indeed, the weakness of tourist spending and the competition from e-commerce are likely to continue to drag on retailers’ incomes. Therefore, we think retail rents will end this year lower, along with office rents. In contrast, we forecast further industrial rental gains.

24 August 2021
↑ Back to top