August 1, 2001—According to a July survey by the Royal Institution of Chartered Surveyors (RICS)—the professional body that represents, regulates, and promotes chartered and technical surveyors—business demand for commercial property in the UK has fallen for the first time in two and a half years.
Over the second quarter 2001, 16 percent more chartered surveyors reported a fall in new business occupation than a rise, compared with 7 percent more registering a rise in the first quarter. The downturn in new occupation reflects concerns over the state of the economy and is particularly apparent in take up of office and retail property, the survey said. New inquiries also fell and there are expectations of further falls in quarter three.
Overall though, rental prospects have eased, with only modest rises amid suggestions that lease durations may even fall following two years of robust growth. The industrial sector has fared better, with the strength of distribution and retail activity offsetting the decline in manufacturing output. Tight supplies shored up rental expectations, which have been at a virtual standstill through much of 1999 and 2000. Also, new development in the office sector saw a rise, with 11 percent more surveyors reporting an increase than a fall—up from 5 percent in quarter one, although it fell for the third quarter in a row in London.
Graham Chase, RICS commercial market spokesman, said, “We are now seeing clear evidence of a change in activity within the UK economy. This change has led to decreasing demand for commercial property. However, there is an element of correction going on here as the extent of demand in the recent past was unsustainable. With little speculative development, there is unlikely to be any significant oversupply of commercial property, despite reduced demand. This reduces the likelihood of widespread vacancies.”
For more information, contact RICS at 020/73343891.
