More retail landlords are offering incentives – RICS
The latest RICS Commercial Market survey, for the second quarter of 2012, shows that a growing number of retail landlords have been offering incentives in order to let their premises. Continued economic uncertainty is continuing to take its toll on the retail sector in particular, RICS says, and landlords with retail property to let are having to encourage would-be occupiers any way they can. “Moreover, with demand set to remain relatively downbeat, it is unlikely that the rental picture will see any significant improvement in the near term,” says RICS chief economist Simon Rubinsohn.
Last quarter, a net balance of 24% more respondents to the survey reported increases in the number of landlords offering financial incentives or rent-free periods, compared with minus 1% in the previous survey. Expectations for future rents were unsurprisingly downbeat, with a net balance of 28% more respondents forecasting that values would continue to fall over the next three months, as interest in retail floorspace declines.
Overall demand for commercial property remained relatively subdued for the UK as a whole during the second quarter, with 7% more surveyors seeing a fall in interest from potential occupiers, rather than an increase. RICS says that uncertainty about the UK’s economic prospects given the ongoing eurozone crisis is clearly having an effect on the appetite of businesses to take on more space. As a result, expectations for rents continued to slide, for the 19th quarter in a row.
The market for Central London office space is continuing to buck the trend, with demand outstripping new supply and thus supporting rent levels. The survey found that 26% more respondents expect further increases in rents for offices in Central London during the next quarter.
