RICS: Rents showing signs of improvement
RENTAL expectations in the commercial property market are improving, which is a sign of a turnaround in the commercial property market in the North of England.
RICS’ latest UK commercial property survey found that while rental expectations are still in negative territory in the office, retail and industrial sectors, they have improved on the last quarter of 2009.
The net balance of chartered surveyors reporting rental expectations has risen from -22 to -16.
Within the northern region, RICS found there was a wide difference in market conditions but in general, the figures for the first three months of the year have shown that enquiries are improving.
The survey also revealed that confidence in the outlook for lettings increased over the first quarter.
Furthermore, 8% of surveyors also reported a rise in demand for offices, compared with 4% last quarter.
However, demand for industrial and retail space slightly declined, with some surveyors voicing concerns of the impact that the upcoming election will have on regional lettings activity following the anticipated public sector employment cuts.
Development starts and completions in the region also moderated across all three areas of commercial property, with new starts on industrial buildings slightly increasing from a negative net balance of 39% to -32%.
Richard Corby, a RICS spokesman on commercial property in Yorkshire and Humber and a partner at Edward Symmons in Leeds, said: “We are seeing a return of confidence to certain sectors, although this is fragile and the forthcoming general election has proved an opportunity for some property decision-makers to defer committing to new space.
“This is especially apparent with office space, as despite enquires increasing and demand improving; the office market in our region is currently the slowest sector to show any real signs of recovery and the one that is suffering from the greatest risk of oversupply.”
He added: “The ‘flight to quality’ is still apparent, with parties able to do deals on commercial space across all sectors to acquire premises of a better quality than they could afford a few years ago.”
