CBRE’s latest prime rent and yield monitor reported that the figure was slightly down on the 3.7% rise reported in 2016, but still above trend.
The research also found that prime commercial property rental values increased by 0.8% in Q4 2017 despite declining yields.
Prime yields dropped by 4bps in the last quarter of 2017, and 18bps for the year as a whole.
Industrial was the best-performing sector for the fifth consecutive quarter with prime rental values increasing 2.3% in Q4 2017.
The sector also saw prime rents increase by 10.4% over the whole of 2017, the first double-digit rise since 1990.
- CBRE reports rise in flexible office space market
- Prime commercial property rents up 0.8%
- UK commercial property rental values rise 0.1%
High street shop rents increased by 0.4% during Q4 while office prime rents rose by 0.3% in the same period.
For office prime rents, growth of 3% and 1.3% were reported during Q4 in the South West and eastern markets respectively, while central London saw a 0.1% drop.
Miles Gibson, head of UK research at CBRE, said: “Despite the hesitant outlook at the start of the year, 2017 demonstrated the resilience of the prime commercial property sector with positive growth in prime rents across the main sectors.
“Yields are low by historic standards, but the gap to gilts is still fairly high which should cushion the sector from the effects of interest rate normalisation.”
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