British commercial property values rise for 10th month in a row

British tenants paying more to rent offices and warehouses as economy recovers

PUBLISHED : Wednesday, 19 March, 2014, 5:14am
UPDATED : Wednesday, 19 March, 2014, 5:14am

British commercial real estate values rose for the 10th straight month last month as tenants paid more to rent offices and warehouses, Investment Property Databank (IPD) said.

The average value of stores, offices and industrial properties climbed 0.6 per cent from a month earlier, London-based IPD said. Total return, which combines changes in real estate values and rental income, was 1.1 per cent.

Office and industrial real estate showed improvement after the British economy started to recover last year, while retail demand has lagged because of weak demand, IPD said. Bank of England Governor Mark Carney has stepped up assurances to keep the benchmark interest rate at a record low, as an improving economy and falling unemployment add to pressure for an increase.

"February saw the same steady growth seen in January continuing, though even more of this was due to regional asset improvements, as returns for London offices slowed slightly," Phil Tily, head of UK and Ireland at IPD said in a statement. "Industrial assets saw a particularly strong month, with their capital growth now equalling that seen in the office market."

Office and industrial property values both rose 0.9 per cent from January, while retail assets gained 0.2 per cent, IPD said. Total returns for offices and warehouses were almost double those of retail properties over the last 12 months.

Income-producing commercial property values began to rally last May after 17 straight months of losses up to last March and no growth last April.