The Easter period may have been a positive time for chocoholics, Royalists and those clever types who took three days annual leave and ended up with an eleven-day break, but the commercial property sector was left with a bit of a bad taste in its mouth.
Investment in commercial property slowed in April due to the extended Bank Holidays, according to CB Richard Ellis (CBRE). There was a positive gain of 0.1% at the ‘All Property’ level, with total gains at 0.6%, a significant weakening on March’s results.
The Central London office market was the strongest subsector, with total returns of 0.9% and an increase in values of 0.4%.
The M25/Outer London region was the weakest subsector, offering returns of 0.2% and a 0.4% capital decline.
There wasn’t much retail therapy in evidence; shops delivered slim capital growth of 0.1% and total returns of 0.7%. In shopping centres, values fell by 0.3%, returning 0.2% for the month.
Industrial returns had a 0.1% capital growth and 0.6% total gains.
CBRE’s report comes as figures released by chocolate manufacturers Thorntons reveal a 23% fall in like-for-like sales during Easter. The chocolatier blamed a recipe of record chocolate-melting temperatures and increased cocoa and sugar prices. Earlier this year, Thorntons began a strategic review of its operations, including some of its commercial property portfolio. In the past six months, nine stores have been closed and three have been relocated. Up to 60% of its 371 company-owned stores have leases due to expire in the next four years and the loss-making stores are expected to come under close scrutiny.
The extended holiday breaks meant a loss in commercial property momentum was expected, say analysts. They note that Central London office markets bucked the trend, registering a 2.7% increase in rent, due to rapidly rebounding occupier markets. In retail, ‘ongoing uncertainty and retrenchment’ among consumers meant occupiers were reluctant to expand.
Commercial property eyes will therefore feast on next month’s figures in search of more sustenance.
