Office sector experiences ''sustained rental growth'' - commercial mortgages

13 December 2006

The office sector has seen a strong period of rental growth since the start of the year, new research by the Royal Institution of Chartered Surveyors (Rics) reveals.

While investors with commercial mortgages may have seen rents in both the retail and industrial property sectors begin to improve last month, Rics states that office rents rose by 4.6 per cent annually, representing a significant period of growth.

Rics states: "Since January, the office market is the only sub-sector to witness a sustained pick-up in rental growth as service employment has continued to expand."

Last month, Nigel Jenkinson, executive director for financial stability at the Bank of England, urged investors, such as those with commercial mortgages, not to overlook the potential for a "sharp adjustment" in the market, reports Reuters.

According to figures produced by the Bank of England, lending to commercial property investors has reached £140 billion in the last decade.