Reports indicate that occupier activity in the commercial property market moderated a touch during July leading to a slowing in rental growth at the overall level for the first time in three months. The first half of 2007 saw occupier take-up in the second quarter approaching 5 million sq. ft. putting it on a par with the same period in 2004 and substantially better than the intervening years. However rising credit concerns resulting in a surge in financial market volatility could slow the pace of rental growth in the office market.
In the investment market, growth in commercial property values turned negative for retail and industrial properties in July and rose at a lesser pace in the office market. Total monthly returns still remain positive outside the retail sector which saw the first declines recorded since September 1992 at -0.2% for the month. Average yields have moved from around 8% at the end of 2003 to 5% currently, with yields now moving out slightly across the market, particularly on less prime stock.