Central London's office, retail and industrial units remain the
only areas of positive growth throughout the UK commercial property
market, according to the latest IPD monthly index.

Even with the capital's continued growth, overall values for the
UK market fell by a further 0.3 per cent, the sixth consecutive
month of negative growth for the commercial property sector.

There is genuine concern that without the impact of returns in
London, the outlook would be even bleaker for landlords up and down
the country.

Phil Tily, managing director of IPD UK and Ireland, said:
"Without the impact of London on returns, which remains the
powerhouse of the UK property market, the declines across the UK
would be even more apparent.

"However, confidence in the Capital, and its ability to keep
growing, should lend some assurance to the industry.

"Despite concerns regarding the sustainability of pricing,
notably in the City office market, the capital remains buoyant.
Values for City offices actually increased by 0.4 per cent, their
strongest growth since September 2011."

A new independent study of commercial property tenancies also
indicated that the average length of a commercial tenancy agreement
was at a record low of 4.8 years. This is due to the rising number
of stop-gap leases, rather than medium or long term deals, as
businesses grow increasingly afraid to over-commit.

Liz Peace, chief executive of the British Property Federation,
remains positive despite the bleak figures, adding: "In uncertain
times it is quite understandable that occupiers are opting for
shorter leases. The long term trend has for some time now been
towards a shorter lease, but this has been accentuated over the
past year by economic circumstances.

"The market continues to deliver variety. Short leases for
start-up SMEs, but longer leases for retail and office occupiers
certain of their future who will get a good deal in return for
their long term commitment.

"Anyone thinking of starting a business in the current climate
will find some good deals in the market and the widespread
provision of rent free periods, even on shorter leases, and also
high incidence of break clauses, all reflects this."

Certainly at Pall Mall Estates we also appreciate the need for
low-risk commercial property at present. We have short term let and reduced rent properties
available to provide a low commitment property solution and make
moving in that little bit more manageable.

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