Retail parks drive CRE capital value growth

The retail park and industrial sectors have driven a 1.3% rise in capital values across commercial real estate last month, although industrial values have slowed on previous months, according to CBRE’s latest monthly index. Commercial property rental values inched up by 0.3% in April, while total returns stood at 1.7%. Marlyn Chantre, research analyst at CBRE, said: “The modest fall in rental values for retail warehouses shows that capital growth is being driven more by yield contraction than rental growth. “Meanwhile, capital growth for the industrial sector slowed slightly in April compared to February and March.” However, Chantre added that overall growth in April equalled the average rise seen over the first three months of the year. She also noted April was the second consecutive month that retail warehouses outperformed other all other sectors in terms of capital growth. Retail park values up Although retail capital values were in positive territory for the second consecutive month, growth slowed. Capital values in the sector increased by 1.7% in April, compared with 2.9% in March. Retail park capital values were up 2.7%, while shops in other locations posted a 0.6% rise. Total returns in retail stood at 2.2%. Rental values for the retail sector decreased by 0.2% over the month, dragged down by a 0.6% decline in shopping centres. Retail parks reported a marginal 0.1% decrease. Rental growth for standard shops remained flat over the month. City boosts offices Offices showed capital value growth of 0.6% over the month. The City market performed best, with capital values up 0.9%. Capital values for offices in the rest of the UK grew by 0.7%. The West End and Midtown sub-sectors declined by 0.4%, while the outer London and M25 markets were down 0.3%. Rental values across the sector inched up by 0.1%. Total returns for the sector for the month were 0.9%. Industrial continues to grow Industrial capital values were up by 1.9% in April, with growth mainly driven by a 2.2% rise in values for regional properties. Warehouses in the South East posted 1.7% growth, which was slightly below the sector average, according to CBRE. Rental values in the sector increased by 0.8% over the month, while returns totalled 2.1%. Top dealmakers: EG names the people driving up the deal-count in our agency rankings >> To send feedback, e-mail pui-guan.man@eg.co.uk or tweet @PuiGuanM or @EGPropertyNews