What To Expect On Returns For Commercial Property Investment

As investors return to the market after being inactive throughout the recession, it can be difficult to gauge what a good return on an investment may be. Yields on commercial investments have dropped in all categories from 12 months ago. Sellers continue to outnumber buyers who are keen to purchase properties with reliable occupiers, since new or risky businesses are still suffering from low sales figures. It is important to keep an eye on the average yields for any property you are looking to purchase.

The Estates Gazette’s recent figures on commercial investment yields are these:

Prime High Street: 5%
Regional High Street: 5.5%
Supermarkets: 4.75%
Primary Shopping Centres: 5.75%
Secondary Shopping Centres: 7.5%
Retail warehouse solus units: 6.5%
Retail warehouse open A1: 5.5%

Offices:
City up to £40 million: 5.5%
Westend £10-80 million: 4.5%
City Fringe: 7%
Regional City Centre: 6%
South East Business Parks: 6.75%

What is interesting is that while the rates are stabilising, all of the yields are down from one year ago. Prime yields are more than 10% lower than twelve months earlier, meaning investors are getting less return for equal investment.