Mixed picture outside London – RICS
RICS has confirmed recent reports on the UK’s commercial property market in its latest Q4 2010 survey, noting that while sentiment is improving in the London office market, matters are very mixed elsewhere.
The All Property net balance moved from –6 to zero in the final quarter of last year, indicating that total lettings activity for business property stabilised during the three months to December 2010. This is the case for offices, retail premises and industrial property, with the net balance for the retail sector actually turning positive during the quarter, for the first time since 2004, as tenant demand improved. There was a sharp increase in demand for London offices while elsewhere in the UK, retail and industrial demand were most positive in the North, RICS says.
The amount of available space ready to occupy also showed signs of stabilising overall during the quarter, with notable declines in supply for London office space and for industrial property in the South and Southeast.
However, even with occupier demand stabilising, the outlook for rents is still slightly negative, RICS says, with economic concerns continuing to weigh on consumer sentiment. Rental expectations bounced back strongly for London office space during the quarter but fell back across regional office and retail markets, while the outlook for industrial rents remained generally stable and in fact improved slightly in London and the South East. Surveyors expect rents to fall at a greater pace for retail property than for industrial space.
Retail property remains the most in demand for investors, but overall investment demand for property has stabilised, according to the report, while new development starts continued to decline for the third year in succession.
