Rental growth starts at home, says UK
A research note from Legal & General Property has predicted that the rate of rental growth across the United Kingdom’s commercial property sectors will almost double over the next few years.
The LGP Fundamentals briefing, titled Commercial property: the return of rental growth, suggests that UK rental growth between 2016 and 2018 will average around 2.8 percent per year, against the 1.5 percent per year of the past five years. The most rapid growth is expected in the office and industrial/logistics sectors, with growth in retail rents “relatively muted”.
LGP points out that rental growth trends are already in place, driven by stronger tenant demand and reduced supply. The volume of available office and industrial space in the United Kingdom has fallen by 28 percent since mid-2010. Although development activity has picked up, this new space has yet to come on stream.
The market environment has seen UK commercial property prices rise by nearly 20 percent