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29 March 2024

Slide in UK commercial tenant demand continues

The outlook for leasing activity also looks poor. (GETTY IMAGES)

Published
By Reuters

Tenant demand for commercial property space in the UK continued to fall in the first quarter, while a record rise in vacancies is expected to speed up the rate of rental declines, a report showed yesterday.

According to a survey by the Royal Institution of Chartered Surveyors (RICS), a net balance of 40 per cent of surveyors reported a fall in occupier demand in the first quarter of 2009, although this eased from 71 per cent in the last quarter of 2008.

"While indicators have moved off historic lows, the reality is that fundamentals in the occupier market continue to deteriorate as companies remain in consolidation mode," Oliver Gilmartin, senior economist at RICS, said in a statement.

The net balance of surveyors reporting a rise in available floor space at offices, factories and shops rose at the fastest pace in the survey's 11-year history, to 65 per cent from 57 per cent the previous quarter, RICS said.

The ongoing economic downturn and continued rise in vacancies made more respondents feel pessimistic about the outlook for rents, with 80 per cent of surveyors expecting them to fall, up from 71 per cent in the previous quarter, it said. The outlook for leasing activity remains poor, as a net balance of 38 per cent surveyors saw a fall in enquiries for business space, it said.

 

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