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Brokers Forecast Slower Rental Growth

LONDON-GVA Grimley has trimmed its forecast for rental growth across all property sectors over the next five years. It now expects rents to grow at 2.7% per annum, down from the 3.7% it was forecasting at the start of the year.

By Graham Parker | Updated on September 03, 2001

LONDON-The economic slowdown in the US and the UK will hit the performance of UK commercial property over the coming five years, broker GVA Grimley has forecast. At the beginning of 2001 it was forecasting an average growth rate of 3.7% per annum,but the deteriorating economic picture has led it to revise its forecast downwards to just 2.7% per annum. At this level, rents will struggle to beat inflation.

GVA Grimley’s head of research Stuart Morley says: ‘Our figures indicate that rental growth will weaken over the next two years, bottoming out in 2002/3, before recovering in the subsequent two years.’ Morley says that offices would remain the best-performing sector, and London the best-performing location.

London office rents grew by 10.2% on average over the 12 months to June 2001, and GVA Grimley is forecasting that this rate will fall to an average of 3.5% per annum over the next five years. This compares with an average growth rate of 2.7% per annum across the UK.

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