The estate agent's figures for overall returns in Q3 are a long way ahead of the IPD's estimate last week of minus 13.9 per cent.

THE MOST recent study of the commercial property market by agent Jones Lang LaSalle suggests that the deterioration in the third quarter up to the end of September has been even greater than reported a week ago by the London-based specialists group IPD.

Jones Lang LaSalle estimated that overall returns in Q3 fell by 17.4 per cent (a long way ahead of IPD's figure of minus 13.9 per cent) and that the slippage for the first nine months of the year has been 25.6 per cent.

IPD's figure for the nine-month period has shown a collapse of 21.2 per cent.

Both indices are usually within a couple of points of each other. But the divergence in the Jones Lang LaSalle report underlines the speed at which conditions have deteriorated. The agency clearly believes that values have not yet bottomed out.

Dr Clare Ericsson, head of research, says the downward change in the overall index was primarily driven by capital value decreases and yield adjustments rather than rental value reductions which were less severe during the year to date.

The worst affected sector was retail because of the dramatic fall-off in consumer spending and also because yield adjustment had a greater impact as it started off from such a low base.

Overall capital values fell 18.5 per cent in the third quarter and by 28.2 per cent in the first nine months of the year. Not surprisingly, retail experienced the sharpest fall, slipping in the third quarter by 23.2 per cent. The office and industrial sectors recorded simultaneous capital value movements, falling by 16.1 per cent and 10.3 per cent in the same period.

Rental movements within the Jones Lang LaSalle index have been more moderate than those of capital values with an overall estimated rental value change of minus 1.9 per cent in Q3 and 0.9 per cent in the year to September.

Office rents within the index increased marginally in Q3 by 0.1 per cent while industrial rental levels remained unchanged in the quarter. More significantly, retail rent fell by 5.1 per cent in Q3 and by minus 3.3 per cent in the nine months to the end of September.

Jones Lang LaSalle also reported that income levels in the index remained constant in the quarter with a moderate increase of 0.6 per cent. The income index in the year to September increased by 2.4 per cent and the index is now showing an income yield of 5 per cent.