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RICS Commercial Property Market Survey (Q3)

Surveyors reported a continued improvement in occupier demand and investment enquiries in Q3, and notably the net balance for offices turned positive on both measures. That said, surveyors expect office and retail values to fall over the next year, while the industrial sector looks set to deliver strong growth.
Sam Hall Assistant Property Economist
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UK Commercial Property Outlook

Interest rate rises hasten property slowdown

The worsening monetary outlook is expected to weigh on property performance. With inflation set to peak at 10% y/y that will force interest rate to 3.0% next year. This will reverse the recent momentum in the commercial property sector, as yields flatten this year and rise from 2023. At the same time, outside of industrial, the rental outlook will remain weak and that means capital value growth will slow sharply this year and move negative in 2023-24. As a result, returns will dip below 5% p.a. in those years, albeit recovering again at the end of the forecast. Within this, we expect retail warehouses, shopping centres and leisure to outperform.

20 May 2022

UK Commercial Property Valuation Monitor

Valuations worsen to post-GFC low

Commercial property valuations worsened further in Q1 and now look overvalued. The spread between property and gilt yields narrowed to its lowest level post-GFC, but still has some distance to fall to reach the lows of 2007. With more interest rate hikes on the cards and gilt yields set to rise further, we expect property valuations to worsen over the next 12 months. See how UK commercial property valuations compare with the US and Europe on our new CE Interactive dashboard.

10 May 2022

UK Commercial Property Data Response

S&P Global/CIPS Construction PMI (Apr.)

The construction PMI for April showed that building activity remained solid, but that the pace of growth has slowed. An easing in new orders growth also hints at a further slowdown ahead, as the sector faces supply constraints, intensifying cost push pressures and higher costs of borrowing. UK Housing Drop-In (10th May 10:00 BST/17:00 SGT): Economists from our property team are hosting a 20-minute briefing to explain why we think UK house prices are heading for a fall – and how bad the fallout will be. Register now.

6 May 2022

More from Sam Hall

US Commercial Property Data Response

Commercial Property Lending (Sep.)

Outstanding real estate debt increased for the fourth consecutive month in September, thanks to net lending turning a corner in the residential sector and accelerating in the commercial sector.

15 October 2021

US Commercial Property Update

Four likely winners in retail

The retail sector appears to be turning a corner, and we think that convenience-oriented Neighbourhood and Community (N&C) centres, out-of-town retail, “destination”-type malls and retail located in “desirable” southern metros are likely to be the sector’s winners over the next few years.

8 October 2021

US Commercial Property Data Response

US Metro Employment (Aug.)

Delta variant fears resulted in leisure and hospitality employment falling in 12 of the 30 metros. Of these, Atlanta, Austin, Charlotte and Dallas were the worst hit. Leisure and hospitality employment remains below its pre-virus level in all metros, while office-based jobs have recovered their shortfall in 14.

29 September 2021
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