London 'key hub' for commercial property growth

The commercial real estate market still holds London at the centre of its growth, recent research has revealed.

The latest Prime Rent and Yield Monitor from CBRE found that prime industrial and office markets reported the most encouraging growth during the first quarter of 2012, with a rise of 0.4 per cent recorded. London's sub-markets were deemed responsible for this as there were some serious weaknesses in the market elsewhere in the country.

However, offices in central London did not perform quite as well as expected, with only the West End recording a rental growth. It saw rents rise by 1.2 per cent over the three-month period, while suburban London saw an increase of 1.3 per cent.

Meanwhile, the prime industrial occupier market saw a 0.4 per cent increase in prime rents for the second consecutive quarter. The Greater London and Eastern areas saw particularly positive levels of improvement, while the South West and Scotland saw a decline.

Despite positive readings, investment market sentiment remained neutral for another quarter. The All Property yield stayed flat at 6.1 per cent for the sixth quarter in a row, despite a 3bp outward movement following a weakening in retail warehouses and northern office markets.

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