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Our research teams provide market analysis, forecasting, and strategy advice to a wide range of clients. Our forecasts cover performance measures for the main segments of the property market in the UK, together with detailed rental growth forecasts for prime offices in a range of markets across the UK. We produce local market forecasts on a customised basis to meet specific requirements. Read more here..
Offices were the best performing commercial real estate sector in Q4 2012
Across the sectors measured by CBRE, offices recorded a fall of just -0.5% in capital value, with positive performance in France, UK and the Nordics.
European capital values remained broadly stable, registering only a marginal decline of 0.8%. However, this does bring CBRE’s pan-European index to its lowest point since Q3 2009.
France and Germany saw values dip marginally over the quarter, (-0.2% and -0.1% respectively) both resulting in an annual decline of 0.5%.
CEE saw capital values decline by 3.9% and 2.2% in Q4 alone. The office sector, which has a significant development pipeline, weighted this result down, including in Poland (the region’s best performing country) where capital values fell in 2012.
Southern Europe and Ireland saw a decline of 4.0% in Q4 and 12.1% over the year, the result of weak economic sentiment and low levels of investment liquidity.
The significant revaluation of assets in this region, particularly across Spain, Portugal and Ireland, given the scale of the repricing, could come to represent good buying opportunities.
The final quarter of 2012 recorded the highest level of take-up of the year, driven by an upturn in confidence in a number of key Western European markets. However in southern Europe and fringe CEE the markets continued to be characterised by a lack of large deals and high renegotiation rates.
Overall vacancy rates generally remained flat, however this hides significant variations both in terms of the quality and location of available space.
Rental levels followed the same pattern as the first nine months of the year, with prime rental growth restricted to the best performing markets and further declines recorded in some of the southern European economies.
The development cycle reached its cyclical low in 2012 but is forecast to increase sharply in 2013-14 however this is heavily focused in a few key cities. Outside these locations the speculative pipeline remains low, and occupiers requiring prime existing space will have limited options.
The largest proportion of respondents to CBRE’s annual survey of the Top 1,000 Chief Executives in Ireland (53%) believe that the economy will grow by up to 1% next year while a further 15% are more optimistic, believing that a growth rate of between 1% and 2% is achievable. None of the Top 1,000 chief executives who responded believe that growth of more than 2% will be achieved in 2013. Almost one third of respondents expect the Irish economy to decline next year.
18% of respondents expect Eurozone base interest rates to fall slightly in 2013 while the largest proportion (64%) believe Eurozone rates will remain at current levels. 18% of respondents expect interest rates in the Eurozone to increase next year.In contrast, 47% of Ireland’s chief executives believe that UK base interest rates will remain at current levels in 2013 while 53% expect US base interest rates to remain stable at current levels next year.
47% of respondents to CBRE’s annual survey believe that the availability of bank funding for Irish businesses and households will rise next year. A further 41% of respondents expect lending to remain at current levels next year while 12% expect Irish bank funding to deteriorate further next year.
The real estate demands of logistics for online retailing differ from traditional store-based retailing in various ways including labour requirements, proximity to multiple delivery destinations, process capability and integration with parcel delivery networks.
Online retailing creates a need for logistics networks and buildings to accommodate a different and more fluid set of demands. Supply chains may take a variety of forms due to multiple destination points.
Customer demands for a higher quality “delivery experience” are driving change and are a major differentiator for retailers. This raises the need for highly-flexible networks including smaller delivery depots and cross-dock facilities close to major population centres. .
This pivotal point in the relationship between retailing and logistics in Europe will offer significant opportunities to those able to respond to occupiers’ highly dynamic requirements in this fast-maturing sector.
Retail sales volumes increased over the Summer. However, further volatility is expected over the coming months.
The threat of increased austerity measures in the forthcoming Budget will undoubtedly impact on retail spending patterns.
Retail rents in all locations have continued to come under downward pressure during 2012, with prime Zone A rents in the Irish capital now standing at €4,500 per square metre – a 55% decline from peak.
Strong occupier activity continues to benefit high streets with an average vacancy rate of only 2.3% on Dublin’s prime shopping streets.
High streets in some provincial locations are enduring high levels of vacancy.
The low turnover of retail investment during 2012 is symptomatic of a lack of supply as opposed to a lack of demand for retail investments.