Occupier Demand Falls Among Commercial Tenants

During the third quarter of this year, demand among commercial tenants fell into negative territory for the first time in 12 months, the latest research from the Royal Institution of Chartered Surveyors (RICS) shows....

During the third quarter of this year, demand among commercial tenants fell into negative territory for the first time in 12 months, the latest research from the Royal Institution of Chartered Surveyors (RICS) shows. According to the organisation, the number of surveyors reporting an increase in the amount of space available for rent rose by 15 per cent, compared to the previous quarter. Retail properties saw the greatest increase in premises coming on to the market, as well as the sharpest drop in occupier demand.

As a result of this downward shift in demand - and the rise in empty units - an increasing number of respondents took a negative view about rental prospects, with offices being the biggest concern among those surveyed. Rics chief economist Simon Rubinsohn commented: "Confidence is clearly critical for the whole of the real estate sector and in the near term there is little reason to believe that it is likely to improve." He added that, outside of London, capital values will continue to struggle while rental growth is likely to remain subdued.

Property Week recently reported on a study by JP Morgan Cazenove, which revealed that the majority of investors in UK real estate markets expect the amount generated by their assets to fall by the end of this year. The majority are now anticipating a three to four per cent return, the publication noted, in comparison to the seven to eight per cent predicted in March of this year.
 

- Tuesday 18 October 2011

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