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.

Average retail rents are expected to grow at 2.6% per annum over five years, down from 3.7% this year. However, retail warehouses are expected to outperform other retail sub-sectors with 2.9% growth, while shopping centres will underperform slightly at 2.5%. Industrial rents grew by an average 5.3% over the past 12 months, but this rate is expected to fall to 2.8% per annum over the next five years.