Los Angeles, February 28, 2014 – Retail properties showed the strongest growth in capital values and rents of all property types globally in Q4 2013, according to CBRE Group, Inc.
“Real estate values continued to appreciate across all property types and geographies during 2013, as sustained investor demand for commercial property fueled further yield compression, driving up capital values—even in the face of higher interest rates,” said Dr. Raymond Torto, Global Chairman, CBRE Research. “As we look toward 2014, real estate values are expected to continue to rise across all three regions as capital continues to flow into the commercial real estate sector. Rents will likely grow at a faster pace, in line with improving economic and real estate market fundamentals in many key markets.”
CBRE Global Capital Value Indices
The CBRE global capital value indices showed gains on both a quarterly and annual basis for all property types. The indices highlight the fact that capital flows—rather than market fundamentals—remained the main growth driver for commercial real estate. This trend has been in place for several years as commercial real estate’s earning multiple has risen faster than property earnings.
The CBRE Global Retail Capital Value Index showed the strongest growth among property types, rising 8.2% during the year. During 2013, the Global Industrial Capital Value Index rose 6.0%, and the Global Office Capital Value Index rose 4.7%.
The Global Industrial Capital Value Index recovered to its pre-recession level during Q4 2013. This was largely due to the stronger growth of the Americas and EMEA Industrial Capital Value Indices during the year.
Regional capital office values rose most strongly in the Americas, which saw growth of 7.1% on an annual basis.
CBRE Global Rent Indices
The CBRE Global Retail Rent Index fared best, rising 4.5% during the year. Rising retail rents reflect limited space availability and increased demand from retailers who need to position their shops and are attracted to prime space.
Industrial rents rose 2.8%, and office rents improved 1.2% during the year.
In the office sector, the Americas, dominated by U.S. markets, posted the strongest rent growth, at 2.4% during 2013 and 1.4% quarter-over-quarter. A contributing factor in this growth has been the historically low levels of new office construction.
By comparison, the Asia Pacific and EMEA Office Indices posted sub-1% growth on both an annual and quarterly basis. The disparity in regional performance was largely due to underlying local supply-demand trends.
To request a copy of the report or to speak with a CBRE expert, please contact Robert McGrath (212.984.8267 or Robert.McGrath@cbre.com).
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue). The Company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through approximately 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.