UK commercial rents remain stable

With reports emerging that commercial rents in the UK market remained stable in July, it gives a sense of relief to property owners in the wake of the recent concerns, especially the UK’s decision to leave the EU.

Though it may be premature to predict the stability of commercial rent for the ongoing quarter, property owners across the UK should take some comfort in the fact that investor sentiment is still high.

The latest CBRE Monthly Index said, “Rental value growth dipped to zero in July from 0.2% the month before, holding steady across office and retail sectors (including Central London offices) and growing by 0.1% in the industrial sector. Downward pressure on rental values came from standard shops within the retail sector, which fell by -0.3% overall and -0.6% outside the South East.

Some of the factors responsible for stable rents, as indicated in the Monthly Index, are record levels of employment and low borrowing costs. It means that the economy has steadied in the wake of intervention from the Bank of England.

There have been sporadic reports of inflow of investment taking a hit and companies hinting that they might move their operations out of London to other EU nations. Many of these companies and investors seem to have decided to adopt a wait and watch policy, as the full impact of Brexit is yet to be realised across the core sectors of the economy.

The next quarter will be crucial for the commercial property sector, as some effects of Brexit, are expected to be felt. If the commercial rents remain stable for August and September as well, it could offer a safety net for the property owners.

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