Commercial property rental values grew by 0.1% across the UK in May, slightly down on 0.2% per month for the last three months, according to the latest CBRE Monthly Index. Capital values grew by 0.2%, continuing the growth trend seen since the start of the year.
Rental growth in May was weighed down by West End and Midtown offices. These two submarkets recorded rental value growth of 0.1%, their weakest since October 2013, leading Central London offices rental values to their weakest growth of 0.2% since June 2013.
Although some parts of London demonstrated flat or slightly negative performance, parts of the capital performed well, such as the City, where office rental values grew by 0.6% last month, compared to just 0.1% in both March and April.
Meanwhile capital values across the UK grew by 0.2% in May, in line with the level of growth seen throughout the year, with the exception of March when values were hit by the one-off impact of stamp duty tax changes. Total returns followed the same pattern as capital values, demonstrating a steady growth of 0.6%, maintaining the level seen since January.
Miles Gibson, Head of UK Research at CBRE UK, said: “Commercial rents and capital values continue to grow in a period of great uncertainty. The London office market has seen some volatility, but the fundamentals of the market are strong. This time next month, we’ll have a clearer idea of the direction capital values and rents will go in the second half of the year, and a flavour of the pace at which they will get there.”