• Mon. Nov 28th, 2022

Commercial real estate continues to show strong performance

ByWillie M. Evans

Jul 25, 2022
July 25, 2022

Cluttons quarterly figures show the continued strong recovery in the commercial property market – but how long can this reasonably last?

Despite a post-COVID recovery landscape, total returns for “All Properties” increased to 23.9% in the last 12 months to the end of March 2022, from 19.9% ​​in the 12 months to at the end of December.

The good performance is largely due to an increase in rental contracts in the industrial and logistics sector.

Despite this, Cluttons warns that the likely ensuing economic recession, rising inflation and interest rates, post-Brexit repercussions and the war in Ukraine will likely slow the pace of growth in capital values.

Cities struggle to retain ‘destination status’ as working from home retains popularity

As companies show signs of accepting home and hybrid working as the status quo, more companies are looking to move their operations remotely. Performance data indicates that secondary office space on shorter leases is at risk of being left empty, with office occupants focusing on energy-efficient Class A space.

Indeed, midweek London Underground travel in central London stabilized at between 60-67% of pre-pandemic levels, with a significant increase on Thursday.

As a result, once busy areas such as Oxford Street in central London are struggling to retain their “destination status”. Retail rental values ​​in central London have fallen by 18% since the start of the pandemic, partly due to a significant lack of spending in nearby shops, cafes and restaurants.

Jamie McCombe, head of Cluttons Investment Management, said: “Employers need to give workers a reason to want to be in the office, which means the best properties that offer experiences workers can’t get elsewhere will thrive and those that do not match. up may very well become obsolete. Owners need to start working much harder to keep their assets up to snuff, rather than relying on location if they want to retain values ​​and outperform in a tough market.

Photo: A photograph of a group of colleagues gathered around a meeting table. A person uses a laptop. Image credit: Pexels

Article written by Ella Tansley | Posted on July 25, 2022

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