New research from Jones Lang LaSalle has highlighted that the
pace of rental growth in the UK commercial property office sector
will far exceed industrial and retail sectors over the next five years.

Despite the sluggish economic recovery continuing to take its
toll on markets, it is said London's West End will continue to lead
rental growth in the UK offices sector, averaging 4.9 per cent
growth annually over the next five years.

London's commercial strength is clearly underpinning the rest of
the nation given the fact that offices in the rest of the UK are
expected to show further rental falls in 2012 due to the weak
demand for secondary properties

Mark Jones, director of the strategic asset management team at
Jones Lang LaSalle, said: "The recovery in the retail sector is
expected to lag other sectors, with further rental falls expected
in 2012 before showing modest recovery from 2013 onwards.

"Retail warehouses are anticipated to perform better than
standard shops and shopping centres, with rental growth averaging
2.7 per cent per annum over the five-year period.

"A lack of debt finance and weak tenant demand are expected to
lead to further downward pressure on rents outside of retail
warehousing and Central London shops."

There is increased caution from investors however due to a
number of factors. The UK fell back into technical recession in Q1
2012 and is only expected to grow by 0.5 per cent for the whole of
2012, while the on-going uncertainty amid the Eurozone has also
played its part.

Subsequently Mr Jones predicted property capital values to only
stabilise in 2013 and beyond.

"We expect all property capital values to fall by -3.7 per cent
this year, given declining rents and rising yields. Equivalent
yields will show further outward shift in 2012, given the
challenges facing secondary markets. Yields will then remain
broadly stable in 2013 before drifting upwards again in the last
few years of the forecast to reflect the expected rise in interest
rates and bond rates," he added.

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