Capital and rental values rise in strong start to 2025
UK commercial real estate continued a strong start to the year, with capital and rental value growth compounding earlier gains to take overall returns for the quarter to over 2%.
Capital and rental values rose by 0.3% and 0.4% respectively last month, amounting to total returns of 0.8% for the month and 2.1% for Q1 2025, according to CBRE’s UK Monthly Index.
The Retail sector performed the best, with a return of 1% for March and a total return of 2.8% for Q1.
UK commercial real estate continued a strong start to the year, with capital and rental value growth compounding earlier gains to take overall returns for the quarter to over 2%.
Capital and rental values rose by 0.3% and 0.4% respectively last month, amounting to total returns of 0.8% for the month and 2.1% for Q1 2025, according to CBRE’s UK Monthly Index.
The Retail sector performed the best, with a return of 1% for March and a total return of 2.8% for Q1.
Capital values for the sector rose by 0.4% in March, with shopping centres rising by the most at 0.5%, retail warehouses up by 0.4% and standard shops up by 0.3%.
Total returns for the month for the office sector came in at 0.7% and 1.7% for the first quarter of the year.
Central London office capital values rose by 1% overall and were the main driver behind much of the capital value growth for the sector overall, which came to 0.3% in March. Capital values for the rest of the UK offices grew by 0.3% in the same period but fell by 0.5% for offices in the Outer London/M25 office region.
Central London offices were also the driving force behind much of the rental value growth, which was 0.6% across the sector but 1.7% in the heart of the capital.
The industrial sector meanwhile saw returns of 2.3% during Q1 and 0.8% overall during March. Capital values rose by 0.4% in and rental values were up by 0.3% last month, with little variation between South East Industrials and Rest of UK Industrials, according to CBRE’s Index.
Jennet Siebrits, CBRE’s Head of UK Research, said the figures showed that the sector was delivering “solid returns” for investors.
She added, however: “Nonetheless, the commercial property market still faces challenges. While performance has improved across the retail, office and industrial sectors in recent months, asset quality is still affecting how individual investments perform, with our latest UK sustainability index showing a widening gap in capital and rental values between more energy efficient and less energy efficient office properties.”
