Retail sector negativity hits commercial property demand – Rics

The trade body said that this stemmed primarily from the retail sector, where 57 per cent of respondents reported a fall in demand, while demand for office space was “broadly stable”. The industrial sector, which includes warehouses, saw a steady rise in tenant demand.

On supply, respondents noted a “slight rise” in office availability for the second straight quarter, while the number of vacant retail units continued the increase seen over the last 18 months.

As a result, almost half of respondents reported a rise in retail inducements, while a quarter saw a jump in incentives to take office space.

While respondents are generally expecting further growth in rents across prime and secondary industrial markets over the next year, for offices Rics identified a “clear split” between prime and secondary, with only the former expected to deliver steady rental growth.

Rics noted that there had been a jump in respondents seeing evidence of firms looking to relocate at least some part of their business as a result of Brexit. In the previous two quarters 24 per cent of surveyors said they had seen signs, but this jumped to 33 per cent in the latest survey.

Tarrant Parsons, economist at Rics, said that the commercial property market was seeing the trends reported at the end of last year continuing into 2019.

He continued: “Brexit uncertainty is again cited to be a negative influence on market activity, causing some occupiers and investors to hesitate as they await further clarity on the future direction of policy.”