Strong Demand in all Commercial Sectors Says RICS Survey

Strong Demand in all Commercial Sectors Says RICS Survey
3rd February 2016 MorleyRichesAblewhite
In Uncategorised

Investment opportunities still remain strong across all sectors and UK commercial property is seen as a “safe haven” for investors despite rise in macro concerns, according to RICS’ Commercial Property Survey for Q4 2015.

It reveals that businesses across the UK are thriving and employment data is strong, which in turn has led to the industrial sector seeing the greatest momentum in occupier demand. The survey showed that 43% more chartered surveyors are currently seeing a rise in demand for industrial space in Q4 2015, while 29% more are seeing a rise instead of a fall in demand for offices spaces and 26% seeing more for retail.

Supply is beginning to decrease and not keeping up with increasing demand, with RICS’ survey reporting an eleventh consecutive quarterly drop in the available space across the commercial property market.

On a positive note, the London office sector has seen development rise substantially over the last three quarters, with 34% more surveyors seeing a rise instead of a fall in office development starts in the quarter.

Rent expectations are looking strong, with 35% chartered surveyors seeing a rise in rents across all sectors. Industrial space is once again the strongest performer with a 43% expected rise.

The investment market has seen a rise in buyer enquiries in each sector, however it is less than previously and the upward trend for foreign buyers has flattened somewhat. Capital values are forecast to rise across all sectors of the market, with the most likely out-performers being prime office and industrial sectors.

Looking forward, rental increases over the next twelve months are expected in the prime industrial market, with 87% of respondents seeing an increase rather than a decline.

Secondary retail space has expectations of growth, with a healthy balance of +51% envisioning rents to grow.

Regionally across the UK, price expectations are high, with London and the East seen as the strongest performers. On the other hand, 81% of the respondents in London see the central area as too overpriced, up on the 77% which had this view in Q3.

Pressure on smaller businesses and startups due to the lack of incentives available is another issue, with the packages on offer from landlords to tenants falling across all sectors in Q4 2015.

Commenting on the findings, Simon Rubinsohn, Chief Economist at RICS, said: “One potential consequence of the current climate is that the trend in foreign investment could slow which is a pattern the latest RICS survey seems to be picking up.”

“However, with the economy still set to post growth in excess of 2% in 2016, the backdrop for the occupier market appears reasonably well underpinned.”

Peter Riches of Morley Riches & Ablewhite, Chartered Surveyors in Colchester commented “Our recent experience bears this out.  We are seeing increased levels of activity in all sectors of the commercial property market in North Essex.  Occupier demand has increased and with limited stock of good quality properties this is starting to be reflected in rents and prices.”

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