The gradual recovery of the UK commercial real estate market continued into April 2025, with the latest CBRE UK Monthly Index reporting modest yet consistent growth in capital values and rental returns.
Capital values across all property sectors edged up by 0.2% in April, maintaining the steady momentum seen throughout the first quarter of the year. Rental values followed suit, also rising by 0.2%, while total returns for the month reached 0.7%.
Retail assets led the market for the fourth month in a row, delivering the highest total return of 0.8%. This was driven by a 0.6% income return and a 0.2% increase in capital values. Within the retail sector, Retail Warehouses posted the strongest performance, with a 0.3% rise in capital values, while Standard Shops and Shopping Centres both saw gains of 0.2%. Retail rental values grew by 0.3% overall.
The office sector posted total returns of 0.6% for the month. Central London offices performed particularly well, with capital values rising by 0.7%. Offices in the rest of the UK experienced a 0.1% increase, while Outer London and M25 offices recorded a slight dip of 0.2%. Nevertheless, rental values across all office segments rose by 0.2%.
Industrial assets mirrored the overall market trend, returning 0.6% in April. Both capital and rental values increased by 0.2%, with little disparity between the South East and the rest of the UK.
Steven Devaney, Senior Director of UK Research at CBRE, commented:
“Rental growth continued to support the gradual rebound in capital values during April. While yields were largely unchanged, we’re seeing a narrowing gap between vendor and purchaser price expectations. Last week’s cut to the UK Bank Rate—and the possibility of further reductions—could help ease borrowing costs and influence bond yields, potentially paving the way for increased activity in the second half of the year.”
With inflation moderating and confidence slowly returning to the market, investors may find cautious optimism in the current trajectory of the UK’s commercial property landscape.
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