Retail Space Leads Global Commercial Rent Growth

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Global retail properties recorded the strongest growth in capital values and rents of all property types during the third quarter, according to a report from CBRE.

The global retail capital value index increased two percent during the third quarter and eight percent year-over-year. By comparison, the industrial capital value index increased 1.4 percent, while the office index rose by 1.1 percent during the third quarter.

The strongest region during the third quarter was the Americas, increasing by seven percent on an annual basis, CBRE reports.

Global retail space also led commercial property rent growth. The retail index increased by 1 percent during the quarter and four percent from last year, reflecting limited space availability and increased retailer demand looking for prime space, CBRE reports.

Office rents recorded almost no change, while industrial rents improved less than 1 percent during the quarter. Global office rent growth in the office sector was dominated by the Americas, led by U.S. markets.

Commercial real estate capital values generally increased faster than leasing fundamentals across all property types during the third quarter, reflecting several capital markets trends that have been prevalent for some time, CBRE said.

"Returns in commercial real estate have been very strong relative to other major asset classes, attracting institutional capital sources to the sector...the number of assets available for sale remained relatively limited," Dr. Raymond Torto, Global Chairman, CBRE Research, said in the report. "Commercial real estate fundamentals are expected to improve and catch up with capital markets demand as regional economies continue to recover."