Insights & advice

How Is Commercial Property Performing in 2014

Whilst the doom and gloom of the recession may have put many investors off commercial property, there do seem to be glimmers of hope within the commercial property market and the figures for 2014 are showing some promise.Although the retail sector is not performing as well as other sectors, which is to be expected, office premises however, are showing the best results again this quarter. They have remained the top performing commercial property for nearly 2 years, showing an increase in rental growth value of 0.2% across the UK this quarter, with London prices mirroring the residential property market with rental value growth of over 3% this quarter.
Yields for offices in prime locations remained static at just over 5.5%, but yields in M25 East and M25 North have been performing better than central London properties.
The high street retail sector is showing a small amount of growth this quarter, which is largely down to a good performance in the North West and in London, with out of town retail parks performing much better than high street commercial property growing at over half a per cent in their rental value.
Whilst yields in retail property and retail warehouses have dropped dramatically, there are signs that they are stabilising at around 5.5%.
However, although rents are falling and yields remain static, high street retail commercial property prices are increasing, with capital values up by nearly 3% There are only two areas in the country showing a fall in capital value which were the North East and Wales.
Industrial space is continuing to perform strongly with a rental growth of 1% in the last 12 months, with strong performances in the Midlands and the North West. However, the yields in this sector are continuing to fall to an average 6.5%. In addition, the capital value has jumped massively in just twelve months with a 16.5% increase, which demonstrates that industrial space is in demand, certainly in the north of the UK.
It does seem that although yields are falling, capital values are on the increase and certainly the industrial sector in the North of England is performing very well. If you are considering an investment in commercial property, it will be a valuable exercise to research the sector and areas in which you are looking to buy to ensure that your investment will work hard for you. You should also seek advice from a commercial property solicitor to review your potential purchase.
For more information about this article or any aspect of our commercial property legal services, please call Ingrid Hindle in our Warminster office on 01985 214444, or Sarah Gratton in Westbury on 01373 865577, or email and we will be delighted to help you (there is no charge for initial telephone discussions).

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