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Is the Commercial Sector Entering 2013 in a Good Position?

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Real Estate Investment  London  Retail Sector  retail rents  Sue Foxley  online shopping  Commercial Property Sector 

Is the Commercial Sector Entering 2013 in a Good Position?

By - Thursday 20 December 2012

As 2013 fast approaches, property market analysts are questioning the position of the commercial sector going into the New Year. Thus far, findings have been mixed, with some claiming economic uncertainty is continuing to affect business confidence. Despite segments continuing to perform well, including rural property and student accommodation, which are witnessing a period of high real estate investment, there is concern that some areas of the sector aren't enjoying the level of recovery hoped.

Cluttons has predicted that the secondary values of commercial property will continue to fall in 2013, but to attract investment to regionally located secondary assets, further reductions will be needed. Sue Foxley, head of research at the company, stated: "Apart from a narrowing band of assets still considered as prime, wholesale re-pricing is well underway. However, there remains a wide void between the perceived pricing of buyers and sellers and we believe this process still has some way to go."

The retail sector in particular is expected to be hit in 2013, as online shopping becomes more and more popular. Cluttons claims retail rents outside of London and the south east will fall by a further two per cent next year, following a four per cent decline this year. However, other market segments look set to experience a more positive 2013, with the industrial and distribution sectors earmarked as rising stars.

"Despite falling occupier confidence, investor interest in industrial assets is steadily growing," Ms Foxley stated. "We have found that total returns for industrial properties averaged at just over four per cent in 2012. However a supply–demand imbalance is likely to underpin investor interest, particularly in London and strong south east locations. This provides a positive outlook for 2013 with yields for the strongest distribution sheds remaining stable." However, only time will tell which market segments will sink or swim going into the new year, but it is hoped that confidence will return and help drive a swift recovery.

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