Trends in UK Commercial Property Rents

According to the data presented by CBRE for the UK commercial property market, retail warehouse rents registered the smallest average quarterly drop of 1.6%, while office rents registered the sharpest quarterly drop of 6.4%, closely followed by shop rents that registered a quarterly drop of 6.2%. Industrial rents registered a relatively small quarterly decline of 1.9%.

Shop rents in Central London registered the smallest drop of 1.7% in the second quarter of 2009, while shop rents in North West and Scotland registered the sharpest quarterly declines of 10% and 11.1%, respectively.

In terms of office rents, the Central London submarkets of West End and City registered the sharpest quarterly declines of 9.8% and 9.6%, respectively. The West Midlands and Wales office markets proved to be the most resilient in the second quarter of 2009, as rents remained stable.

Wales, Northwest, Yorkshire & Humperside and Northeast proved to be the most resilient UK industrial markets in the second quarter of 2009, as industrial rents remained stable. However, industrial rents in the Eastern region and Southeast registered the largest quarterly drops of 3.8% and 2%, respectively.

In terms of annual changes in commercial property rents, industrial property rents registered by far the smallest decline of 2.5% followed by retail warehouse rents that dropped 8.9%. The largest by far annual drop in rents of 20.5% was registered in the office property segment. It is interesting to note that according to the CBRE rental index, in the second quarter of 2009, office rents in the West End and the City were 34.2% and 31% below the levels that prevailed in the second quarter of 2008. UK shop rents were down 9.8% compared to their levels in the second quarter of 2008.

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