Surge in demand for commercial property – RICS
SUSTAINED demand for commercial property in the UK now stands at its highest since 1998 and, along with a surge in investment, reflects the widening economic recovery, according to the latest RICS (Royal Institution of Chartered Surveyors) Commercial Market Survey.
During the first three months of the year (Q1 2015), the North West saw a significant upturn in demand for office space, with 38% more respondents seeing more prospective interest.
As a two to three month lead indicator on figures from the ONS (Office for National Statistics), the data shows that as tenant demand and investment into the commercial sector have increased, so have employment and GDP growth in the UK.
Since the end of 2012, demand for commercial property in the North West has risen rapidly, but the resulting tightening of the market has seen rents rise and availability fall, with 22% more surveyors in the region seeing a fall in the availability of commercial space, and almost one in four (23%) expecting rents to rise over the coming three months, rather than fall.
As availability declines, the impact of these tighter market conditions on rental expectations has resulted in them edging upwards. This is particularly apparent across offices and industrial space in the North West, while retail rental expectations continue to lag behind (14% more respondents expect retail rents to increase).
Will Sadler of Legat Owen, which has offices in Merseyside and Cheshire, said: “We are seeing a sustained and significant improvement across all market sectors, with significantly more speculative refurbishment and development. Rental levels are rising but incentives seem to be falling.”
Brian Ricketts of Hitchcock Wright & Partners in Liverpool added: “Market sentiment continues to strengthen which is hopefully a precursor to tangible improvements in rents and capital values generally.”
Simon Rubinsohn, RICS chief economist, said: “The strength of the latest commercial property survey suggests that the underlying momentum of the economy will continue to accelerate through the course of this year.
“What is particularly encouraging is that a better tone to the results is visible in all parts of the country and increasingly in secondary as well as prime space. Given that these indicators have historically provided a strong steer as to the performance of the economy two to three quarters out, it is hard not to be encouraged by the conclusions of this report.
