Capital values continue to rise for commercial mortgage holders

CBRE data shows ongoing strength in commercial property sector.

Commercial mortgage holders are likely to have benefited from further growth in capital values last month, new data suggests.

In its latest monthly index, real estate consultancy CBRE recorded strong performance across all commercial property segments in March.

Capital values rose by 1.1 per cent during the month, meaning total growth for the first quarter of 2014 was 2.1 per cent.

Overall returns reached 1.6 per cent in March and 3.7 per cent for the opening quarter, according to the figures.

Focusing on particular sectors, the monthly index showed that industrial sites delivered the highest total return of 2.1 per cent, largely as a result of a 1.6 per cent boost in capital values.

Offices generated capital value growth of 1.5 per cent and returns of 1.9 per cent, with the City and Midtown areas in central London showing the strongest performance.

Regional office markets also experienced positive trends during March, with the 'rest of UK' category - meaning outside Greater London and the M25 - achieving a capital value increase of 1.1 per cent, the highest for 52 months.

The retail sector also improved last month, with capital values picking up by 0.6 per cent and returns climbing to 1.2 per cent.

CBRE research analyst Aleksandra Starczynska said: "The monthly index is showing continued strong performance from UK commercial real estate.

"Perhaps the most notable result in March was the continued improvement in 'rest of UK offices', whose 1.1 per cent capital value growth was the highest recorded by that segment since 2009."

Jones Lang LaSalle this month released a report focusing on the office market in Bristol, showing that take-up reached 115,750 sq ft in the city centre and 108,241 sq ft in out-of-town locations during the first three months of the year.

The resulting total of nearly 224,000 sq ft is 25 per cent up on the five-year quarterly average of 177,000 sq ft.


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