UK Commercial Property
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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
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UK Commercial Property Chart Book

Industrial leads yield-driven recovery in values

The recovery in UK commercial property continued into August, despite a backdrop of more equivocal economic data. But, while the economic softness should be short-lived and returns for 2021 are likely to remain healthy, we suspect that the real estate recovery will struggle to maintain its current pace. The upturn so far largely reflects a yield-driven boost from the industrial sector, which we think will temper next year, while any revival in office and retail sectors remains hamstrung by structural concerns.

24 September 2021

UK Commercial Property Update

Limited risks to DM property from Evergrande

The Evergrande crisis has made waves in financial markets this week. But, while the developed property markets we cover may see some short-term upheaval, we think the impacts outside of China are unlikely to be severe or lasting. In view of the wider interest, we are also sending this UK Commercial Property Update to clients of our Commercial Property and Housing Services.

23 September 2021

UK Commercial Property Update

Will the rental backlog derail the retail recovery?

One feature of the COVID-19 era has been persistent non-payment of rents, particularly in the retail and leisure sectors. But we don’t think this will come to a head next year once the eviction ban lifts, as by then the economy should be in better shape and landlords will have little interest in forcing the issue.

17 September 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
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