Commercial property rents slashed by almost 30%

UK rental values are now at a sixteen year low after commercial property rents declined once again last month.  Demand for commercial property is at an all time slump reflecting the sheer extent of the different industries affected by the recession.  Many businesses are closely monitoring their outgoings and downsizing wherever possible meaning office relocations and expansions are not even being considered.

Retail commercial properties are amongst the worst affected with shop rents being cut across the UK by almost a third over the past year alone.  This hasn’t been helped by the collapse of retailers such as Woolworths, MFI and Land of Leather.  Rising vacancies have naturally caused a decrease in rents with retailers that are still in business seeking large discounts and generous lease terms from landlords in order to help them through these difficult times.  It is not uncommon for landlords to now offer several years completely rent free in order to get retailers to sign up to longer lease deals.  This is exactly what is happening in a new shopping centre development that is due to open this September in Cardiff, where Land Securities and Liberty International are offering free rent for three years to retailers.

Despite the recent negative press there is good news on the horizon with experts believing that rent decreases are likely to have reached a plateau given the rate of decline to date.  There are also a number of retailers that are still looking into commercial property expansion with companies such as HMV, Primark and Dunhelm all looking to open new stores.

The UK is at the forefront of the global commercial property collapse.  However, over the past six months declines in commercial property confidence have also been noted in previously unaffected countries such as Russia, UAE, Ukraine and Asia.  This demonstrates the now fully global impact of the recession.  Despite the fact the UK is one of the worst affected countries we are also expected to be one of the first to recover due to the speed and severity of our commercial property value declines so far.  Good buying opportunities are already available for cash rich companies and retailers and businesses alike are being encouraged to take advantage of the current low rental rates as many experts believe UK rental declines have now reached a plateau.