Filtered by Subscriptions: UK Commercial Property Use setting UK Commercial Property
Recent Bank of England and De Montfort University reports suggest that deleveraging in the UK commercial property sector is likely to continue in a slow but reasonably orderly fashion. However, one central message of both reports seems to be that building …
17th December 2010
The number of jobs in the financial & business services (FBS) sector rose again in Q2, taking the increase since the start of the year to 1.7%, or 104,000 jobs. We remain cautiously optimistic about the outlook for office rental values, though this will …
15th December 2010
IPD vacancy rate data support the widely-held view that non-prime property has suffered more than prime from a rise in empty floorspace over the past two years. The figures also suggest that the standard shop segment has been the worst-hit by rising …
9th December 2010
Mergers and acquisitions (M&A) activity involving UK firms strengthened in Q3, a development that is likely to have supported office rents in Central London. Even so, with economic growth likely to be well below trend in 2011 there seems every chance that …
7th December 2010
Commercial property remained the most active part of the construction sector in November, helping to deliver a modest rise in construction output. But whether this apparent optimism about the occupier market outlook can be sustained through 2011 will …
2nd December 2010
We suspect that the next material move in the property to bond yield spread is more likely to be down than up. That move may still be some way off, however, perhaps not even until 2013. But, when it does arrive, and after allowing for the likelihood that …
30th November 2010
Net new lending to commercial property was negative again in October. Low gross lending and borrowers’ focus on repaying existing debt are both likely to have contributed to that weak net figure. There also seems to be every chance that net lending flows …
29th November 2010
Respondents to the Q4 IPF Consensus expect that a 6% gain in all-property capital values this year will give way to a modest fall of 2% next year, driven by higher yields. We also expect prices to drop in 2011. However, some forecasters still expect price …
26th November 2010
On the whole, financial markets have become increasingly optimistic about the prospects for the UK’s recovery. Interest rate expectations have begun to rise again and equities have rebounded, while inflation expectations in the bond market are now …
24th November 2010
All-property rental values were basically unchanged again in October, with modest rises in Central London office markets balanced by falls elsewhere. A meaningful recovery in rental values, however, remains some way off, given that we expect GDP growth to …
The latest RICS Construction Survey had a distinctly negative tone, with activity in all sub-sectors falling in Q3. Given construction’s key role in the wider recovery to date, the survey thus underscores our sub-consensus growth forecasts for 2011 and …
19th November 2010
Our forecast is that annual IPD all-property total returns will average about 9% over 2011-14. The big picture is that low and broadly stable bond yields will support property prices over the forecast period, as will an occupier market recovery, albeit …
16th November 2010
Transactions activity has cooled recently, with anecdotal evidence suggesting a buyer/seller stand-off in the secondary segment has been a contributing factor. On IPD data, this segment is fairly small, so resolving any buyer/seller mismatch through lower …
11th November 2010
Recent RICS data suggest that office rental values across the UK may fall slightly in Q4. We suspect that this will prove too pessimistic. Even so, the data are a timely reminder of the fragility of confidence about the prospects for the economy and …
9th November 2010
The results of today’s RICS survey were very downbeat. Admittedly, they may have been unduly influenced by the fact that the survey responses were taken prior to the Spending Review announcement, when uncertainty about the government’s plans was high. …
2nd November 2010
Today’s PMI showed that the pace of growth in commercial property construction slowed in October but remained positive. To our minds, however, with economic growth set to slow next year and job losses likely to rise, the pick-up in rental value growth …
Net new lending to commercial property was negative again in Q3 but the sector’s share of total loan books remains high. However, anecdotal evidence that lenders may now be starting to take a harder line on refinancing suggests that this property exposure …
29th October 2010
Central London office rents will rise further. However, the revival of the medium-term development pipeline should ease occupiers’ fears about being stuck in unsuitable premises. Together with the faltering economic recovery that we expect in 2011, this …
28th October 2010
All-property initial yields were flat in September, at about 6.45%. By contrast, bond yields fell and,hence, the property to bond yield spread is now back at around 350bps. With economic uncertainty still high, we doubt that this spread will fall …
22nd October 2010
The dataflow on the industrial sector of the economy generally remains a little patchy but the CBI’s employment intentions balance nevertheless still points to a strong rebound in industrial property rental values next year. In our view, however, weak GDP …
19th October 2010
Over the next four to five years, we expect leisure total returns to average about 6% per year. That is lower than the returns we expect in the office and industrial sectors (both 7% per year) and only higher than the retail figure (closer to 5%) because …
14th October 2010
New shopping centre completions are likely to remain low over the next 12 to 15 months. As in the London office markets, this could lead to a spike in prime rents as occupiers compete to secure a limited supply of high-quality space. However, with the …
12th October 2010
The prospects for commercial property returns, while not without downside risks, are better than current derivatives pricing implies. The key problem here is that landlords, i.e. “producers” of commercial property, have a clear incentive to use a …
5th October 2010
Today’s PMI suggested that commercial property construction accelerated sharply in September, pointing to continued confidence on the part of developers about the prospects for occupier demand. However, this may yet prove to be a blip in a weaker trend …
4th October 2010
Net lending to commercial property was substantially negative again in August and, given banks’ and building societies’ high exposure to the sector, we would expect net lending to remain weak. Today’s Credit Conditions Survey supported that view. … Credit …
30th September 2010
The economy is now estimated to have grown by 1.2%q/q in Q2, up slightly from the original estimate of 1.1%. However, that is likely to mark the peak for growth and we continue to think that a renewed labour market downturn is on the cards. Inflation is …
28th September 2010
Today’s CBI/PwC Financial Services Survey suggested that, in Q3 2010, output in this sector of the economy rose for the fifth consecutive quarter. A composite measure of some of the main survey balances now points to IPD all-office rental values beginning …
27th September 2010
Net institutional property investment in Q2 was positive for the third consecutive quarter. With funds still having cash available to place in the market, our view remains that recent falls in property yields are unlikely to be reversed. Equally, however, …
24th September 2010
The industrial sector of the economy has recorded decent growth in recent quarters but the outlook for GDP, ultimately the key influence on demand for industrial property, remains weak. And with the existing, large overhang of vacant space likely to be …
23rd September 2010
15th September 2010
With the influence of supermarkets and internet retailing likely to grow, we think that a downward trend in real high street shop rents is possible over the long run, with real rents falling by 1% to 1.5%p.a. However, by contrast, if planning rules were …
13th September 2010
Headline IPD City office rental values fell by less than the West End during the 2008/09 downturn. But effective rents in the City market actually fared much worse. Since the end of 2009, however, effective City rental values have risen much more quickly …
9th September 2010
The nascent recovery in mergers and acquisitions (M&A) activity involving UK firms appears to have stalled in Q2. Against the backdrop of subdued economic growth, M&A activity is likely to remain pretty soft. At the margin, this supports our view that the …
7th September 2010
Respondents to the IPF Consensus continue to anticipate that commercial property capital values will stabilise over the remainder of this year but will edge lower next year. The weakest forecast is for a fall of 8% in 2011. By contrast, we continue to …
3rd September 2010
Today’s PMI suggested that growth in commercial construction sector activity continued to slow in August, hinting at growing concerns amongst developers about the prospects for economic growth and occupier demand. … CIPS/Markit Construction PMI (Aug …
2nd September 2010
Data on the economy over the past month showed that the labour market continues to enjoy a rebound, with unemployment falling by about 50,000 over the past three months. However, we expect public sector job cuts to trigger renewed rises in unemployment …
25th August 2010
We think that consumer spending will struggle to grow at all for at least the next two to three years. Taking the period 2010-14 as a whole, this will result in average total returns for high street shops of around 6% per annum. These will be lower than …
23rd August 2010
The latest RICS Construction Survey suggested that activity across the sector as whole dipped in Q2. Encouragingly, however, the slump in public sector construction activity was not mirrored in the private commercial sector. … RICS Construction Survey (Q2 …
18th August 2010
Our medium-term forecasts are broadly unchanged from the previous Analyst. As we had expected, the recovery in commercial property capital values seems to have run out of steam. However, over the next two years or so, the combination of a weak economic …
16th August 2010
On the whole, markets have so far shrugged off recent concerns over a double-dip in the UK and global economies. Equity prices have recovered sharply over the last couple of months, partly on encouraging news on corporate earnings, while sterling has …
12th August 2010
Notwithstanding some less encouraging recent news (e.g. yesterday’s reports of looming job cuts at Barclays Capital), London’s City and West End office occupier markets are in recovery mode. Past experience suggests that the capital’s rebound should be …
The latest PMI reported that commercial property construction activity rose again in July. These data suggest that developers remain confident about a rental recovery by early 2011. Our view is that the rental downturn is indeed nearly over, but we remain …
3rd August 2010
It is pretty clear that property investors’ sentiment has cooled in recent weeks. Accordingly there seems to be little scope for further gains in capital values. But with bond yields likely to stay low we continue to doubt that a renewed property price …
2nd August 2010
Net lending to commercial property in Q2 was very weak. Admittedly, anecdotal evidence suggests that lenders’ wariness to the sector may have eased slightly in more recent weeks. But with their exposure to commercial property remaining high, we still …
29th July 2010
The economy grew surprisingly strongly in Q2. Indeed, the pace of expansion, at 1.1%q/q, was double the consensus expectation. Manufacturing, financial & business services and distributive trades (e.g. retailing) all contributed to growth in Q2. However, …
28th July 2010
The latest Colliers/Real Estate Capital (REC) survey suggested that rental and capital values will be largely unchanged over the next 12 to 18 months. In the absence of an obvious trigger (e.g. higher interest rates) for renewed falls, we also continue to …
27th July 2010
Forward-looking indicators of industrial production have cooled a little, though there are some better signs for employment in this sector. The latter suggests that the floor for industrial rental values could arrive sooner rather than later. However, …
21st July 2010
The tone of today’s RICS survey was downbeat and is probably a timely reminder that commercial property occupier demand and rental values remain vulnerable to further job cuts. Although we still think that the bulk of the downturn in rents has already …
20th July 2010
The more positive tone of yesterday’s labour market data was encouraging for commercial property rental values, which we still expect to find a floor later this year. However, with public sector job cuts looming, our view is that overall employment will …
15th July 2010
The number of jobs in the financial and business services (FBS) sector rose strongly in Q1 and anecdotal evidence suggests that hiring has since remained solid. Although regional offices are still likely to struggle over the next few quarters, we expect …
14th July 2010
