Commercial rental growth on the UK's most exclusive shopping streets has fallen

Emma Haslett
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Rental growth in some of the UK's most exclusive areas was weak (Source: Getty)
ommercial rents in London's most exclusive areas slowed to its lowest in 2016 in the final quarter of the year, new figures have shown.

Rental values on so-called prime commercial property fell to 0.4 per cent between October and December, the lowest quarterly growth in a year. During the full year rents increased 3.7 per cent.

The research, by CBRE, showed industrial property was the most sought-after in the capital, with rents in prime locations increasing 2.8 per cent.

Meanwhile, rents on high street shops across the UK rose 0.3 per cent during the final quarter of the year, while office rents were completely flat.

For investors, things looked rather less encouraging, with yields edging down to 5.4 per cent in the final quarter, from 5.5 per cent in the quarter before.

“Despite 2016 being characterised by uncertainty in the UK’s political and economic landscape, prime commercial property sector has again shown its resilience with positive, albeit easing, growth in prime rents across all main sectors," said Miles Gibson, head of UK research at CBRE.

"The industrial sector in particular has helped steady the ship throughout 2016, outperforming the national average in every quarter.”

Last month the Bank of England warned the UK's commercial real estate sector could put the wider economy at risk.

The Financial Policy Committee said valuations in some parts of the sector appeared stretch, meaning there was a risk of "further adjustment in the sector" which could create knock-on risks for the UK's financial system.

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