Region ‘outperfoming’ national commercial property market

YORKSHIRE and the Humber is bucking the national trend of a falling demand for commercial property, according to an influential survey.

According to the latest RICS commercial property survey, the balance of surveyors reporting demand for commercial property in the first quarter of 2008 across the country has fallen at the fastest pace for more than six years.

Rental confidence has also fallen at the fastest pace for a decade, according to the research.

Nationally, 30% more chartered surveyors reported a fall rather than a rise in demand compared to 15% in the final quarter of last year.

All sectors reported a fall for the second consecutive quarter with the retail sector showing the largest decline, dropping to the lowest balance in the survey’s history, with 40% more chartered surveyors reporting a fall than a rise in retail demand, compared to 27% previously.

However, in Yorkshire and the Humber, only 8% more surveyors reported a fall than a rise in retail demand, compared to 57% in quarter four, 2007. It was also the only region in the UK where occupier enquiries increased with surveyors saying they felt confident about the sector’s future prospects.

The survey said turmoil in financial markets had impacted upon decision making in the business community with many re-evaluating their demand for commercial property space. The office sector has been the worst hit area with 35% more surveyors reporting a fall rather than a rise in new enquiries for offices compared to only 13% in the final quarter of 2007.

However, in Yorkshire and the Humber the office market appeared stable with the number of new enquiries remaining neutral compared to the fourth quarter of 2007 when 54% reported a fall rather than a rise.

The survey said that looking forward, surveyors continued to be pessimistic. Confidence in activity fell across all sectors with confidence in retail activity falling to the lowest level on record.

Richard Corby, partner at Edward Symmons in Leeds and spokesman for RICS in Yorkshire, said: “The commencement of new commercial developments across the region has fallen since the new year as a result of reduced developer confidence and tighter lending controls from the banks.

“Therefore an oversupply of new space in all sectors will be largely avoided in most of Yorkshire and the Humber. However the supply of second hand space has substantially increased across the region and consequently the incentives available to tenants are better than ever.

“Landlords experiencing the loss of Empty Business Rate Relief since 1 April 2008 have become very keen to secure tenants which, was one of the reasons the Government introduced it. It is therefore a time for prospective tenants to push for the best deal that they can and a time for vendors to be realistic in their price aspirations.”