Industrial yields have risen, but differential over offices remains low

Initial yields on European industrial property have risen further from their trough in mid-2007 than office and retail yields. This could be due to a sharper downward revision in investors’ rental growth expectations for industrial property. Rather, we think that it is mainly due to investors re-pricing the risk of industrial property relative to office and retail property, following a steady decline in the relative pricing of the sector since the mid-1990s.