Retail and office sectors in London lead the rise in rents in final quarter of last year
Further evidence emerged today of the recovery in the commercial property market in the last quarter of 2009.
Property consultant CB Richard Ellis said yields for commercial property declined 60 basis points in the last quarter, despite rents growing by 0.1%, meaning the value of commercial property was increasing.
The fall in yields occurred across all property sectors, but was most marked in retail warehousing, with yields falling 90 basis points.
The rise in rents was the first after five consecutive quarters of decline, which means overall rents have fallen 13% from their peak.
Rises were lead by central London retail and offices, with rents growing by 4.9% for shops and 1.4% for offices. Outside the capital growth was largely tentative or negative.
Nick Parker, analyst for UK research at CB Richard Ellis, said: “The recovery in the investment market, has seen around £10bn of property bought in the final quarter of 2009, a volume last seen in the boom years.
"Despite prime rental growth turning positive, this is as yet skewed towards central London, with most occupier markets remaining fragile going into 2010.
"A more broadly based turnaround will come from a revival of growth in the regions, once the economy has gained a firmer footing.”