A stabilising of rents could be an “inflection point” for the retail real estate market, says the team at RBC Capital Markets.

Real estate analysts led by Julian Livingston-Booth say in their latest note that they expect rent for better quality retail properties to stabilise this year. They pointed to a “big slowdown” in year-on-year rent declines, which peaked in November 2020 at 8.8% and reached 3.4% in November 2021.

“The current month-on-month change in the growth rate is the most positive it has been since at least 2000 and if sustained through December implies UK retail rents troughing at the end of 2021, 26% below their previous peak,” the team said.

They also highlighted recent deals such as Hammerson’s exit of the Silverburn centre in Glasgow as “significant in our view, coinciding with the rapid slowdown in rent declines in general”.

“All key UK CRE sub-sectors enjoyed better trends in 2021 than 2020, with some notable positive momentum building,” the team said. “Current month-on-month increases in year-on-year market rent growth are more positive for UK industrial property than at any time since 2000. Likewise for UK shopping centres.”

But they added that the brighter outlook was yet to be replicated in data for the capital’s office market.

“In contrast, London office market trends remain uncharacteristically flat against an uncertain backdrop for tenant demand,” they said.