Demand for business premises rose for the sixth consecutive quarter despite a lacklustre retail says a report from the Royal Institution of Chartered Surveyors (Rics).
The steady increase in demand has led chartered surveyors working on commercial property to upgrade their expectations of rent rises to the highest in four years says Rics, with 13% more chartered surveyors saying they expect rents to rise rather than fall up from 9% of chartered surveyors in the final quarter of 2004.
Levels of vacant business space drop back at their fastest rate since the end of 2000, returning some bargaining power to landlords. The value of inducements offered by surveyors to secure tenants also fell for the first time in four years but the current market still favours occupiers.
Rics says there is continued growth in the office sector and strong distribution activity is underpinning deamdn in the industrial property market. But a slowdown in consumer spending has squeezed retailer’s margins, reflected by a number of high profile recent retail failures.
Graham Chase, vice president of Rics, says there has been a change in power base in the high street. “The current market is one which exposes poor retail practice but allows those at the cutting edge to gain market share. This is encouraging news for investors who have entered the market in recent years. However, the outlook for the commercial property market is for steady financial returns over the next two years rather than the heady price appreciation of 2004.”
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