The Prime Rent and Yield Monitor report has disclosed that prime commercial rents went up by 0.8% in Q4 of 2017, and prime rents over the whole of 2017 grew by 3.1%.
The industrial sector showed a surge in rents, up by 10.4%. This is the first-time rents have increased by over 10% since 1990.
High street shop rents increased by 0.4% in the last quarter of 2017, and by 2.7% during the whole of 2017.
Office rents went up by 0.3% in the final quarter of 2017, but Central London shops fell by 2.8% during the year.
The one sector where rents fell nationally was retail warehouses, while offices only grew marginally by 0.7%.
Although rents increased, the basis points (bps) on rental yields fell by 4bps in the fourth quarter of 2017 and by 18bps for the whole of 2017. Office yields fell marginally by 2bps. The industrial sector had steeper falls in rental yield, with decreases of up to 27bps.
The value of commercial properties grew by 1.6% in quarter four of 2017 and by 6.8% overall in 2017, although shopping centre values fell by 2% and retail warehouses by 0.5%. Individual shops increased in value by 3.4% and offices by 4.1%. Industrial property had the highest rise in capital growth at 22.6%
Interest rates on commercial mortgages remain low despite the small increases in the Bank of England interest rate, meaning investors that carefully choose the best commercial property sectors and locations can still expect reasonable profits.
