Demand for commercial space in the South West surges ahead

RICS UK Commercial Market Survey says demand for office space rose strongly in Q1

Article posted: 13 May 2011

Demand for commercial property in the South West rose strongly during the first three months of 2011, according to the latest RICS UK Commercial Market Survey.

20% more surveyors in the South West reported increases rather than falls in demand for commercial property, up dramatically from the previous three months.

Office space in the South West showed the greatest supply increases. As a result, expectations for rents in the region continued their slide for the 14th consecutive quarter, with 20% more surveyors expecting rents to fall rather than rise. Elsewhere, only office space in London bucked this trend, with rental expectations increasing at the fastest pace since Q3 2007 in the capital.

Respondents to the survey noted that rent levels had been affected by changes in empty property business rates. This is a particular problem where there are high levels of empty commercial space, such as in the Midlands and Wales.

Turning to the investment market, surveyors suggest that unwillingness by banks to lend at competitive rates is continuing to discourage investors, which is being particularly reflected in a depressed market in secondary property. Across the South West, capital values have now recorded consecutive negative readings since Q2 2007.

Commenting on the findings, James Gregory, RICS South West spokesperson and Partner at Alder King said: “The survey does encouragingly suggest that take up of accommodation is growing in the South West, particularly for the industrial sector. However, there is in many areas an over supply of property in the market and this imbalance between supply and demand will continue to impact on commercial rents in the region.”

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Posted by Jo