Rental depreciation and capital expenditure in the UK commercial real estate market, 1993–2009

Neil Crosby, Steven Devaney, Vicki Law

    Research output: Contribution to journalArticlepeer-review

    12 Citations (Scopus)


    This paper identifies long term rental depreciation rates for UK commercial properties and rates of capital expenditure incurred to offset depreciation over the same period. It starts by reviewing the economic depreciation literature and the rationale for adopting a longitudinal method of measurement, before discussing the data used and results. Data from 1993 to 2009 is sourced from Investment Property Databank and CBRE real estate consultants. This is used to compare the change in values of new buildings in different locations with the change in values of individual properties in those locations. The analysis is conducted using observations on 742 assets drawn from all major segments of the commercial real estate market. Overall rental depreciation and capital expenditure rates are similar to those in other recent UK studies. Depreciation rates are 0.8% pa for offices, 0.5% pa for industrial properties and 0.3% pa for standard retail properties. These results hide interesting variations at a segment level, notably in retail where location often dominates value rather than the building. The majority of properties had little (if any) money spent on them over the last 16 years, but those subject to higher rates of expenditure were found to have lower depreciation rates.
    Original languageEnglish
    Pages (from-to)227-246
    Number of pages20
    JournalJournal of Property Research
    Issue number3
    Early online date4 May 2012
    Publication statusPublished - 2012


    • capital expenditure
    • depreciation
    • obsolescence
    • rental values
    • commercial property


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