Rising occupier demand for, and falling availability of, office space has resulted in a buoyant commercial property market, according to the Royal Institution of Chartered Surveyors (RICS).
The latest UK Commercial Market Survey, from this pinnacle of all things land, property and construction related, covers the three months to June, and it finds rental expectations to be ‘the most elevated’ in the London market, where the hunger for offices is seen as ‘buoying the London picture’. The financial services sector has the healthiest appetite, just as availability continues to fall in this segment of the commercial property market.
Rental outlook for retail and industrial space is described as ‘stronger in London than elsewhere’, while occupier demand in London is labelled ‘moderate and broadly comparable to the rest of the country’. Surveyors are said to be ‘upbeat’ about the rental prospects for these two sectors in London, due to a slower increase in availability compared to the pace set in other UK regions.
New developments of commercial property are reported to be rising strongly in London, unlike the rest of the UK, where the Midlands and Wales are singled out as areas witnessing the lowest level of development in commercial property. Further concern is reserved for northern England, where increased availability is attributed to ‘fewer companies looking for space, due to the economic downturn’.
Demand for commercial property investment is said to be increasing outside of the London area, although not enough to affect capital value expectations. While the outlook remains good for London, enthusiasm wanes once surveyors look beyond the capital, as 20% of surveyors anticipate price falls rather than rises there.
The RICS foresees London’s commercial property market as continuing ‘to enjoy the trappings of recovery’, reflecting a ‘markedly different economic picture’ when compared with other parts of the UK where ‘the icy winds of recession are continuing to bite’.
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