RICS survey says cuts are holing back market
Jul 27 2010 by Henryk Zientek, Huddersfield Daily Examiner
TENANT demand in Yorkshire has remained positive, according to a property survey.
But worries about the impact of public spending cuts are dogging the sector, says the latest commercial property survey from the Royal Institution of Chartered Surveyors.
Across the UK, demand fell during the second quarter of the year. The survey said 7% more chartered surveyors reported a fall than a rise in tenant demand – down from a positive 6% in the first quarter and the first negative reading since the first quarter of 2009.
Tenant demand for offices fell across all regions – with London seeing the biggest fall in sentiment. There, 38% more chartered surveyors reported a fall than a rise in office demand from a positive 32% in the first quarter.
Surveyors said uncertainty over public sector spending cuts had weighed on investment decisions. Demand in the retail and industrial markets also fell across most regions, although the north is bucking the trend.
In Yorkshire, tenant demand remained strong in the retail market with 25% of the region’s survey.
Industrial demand slipped with 6% of surveyors in the region reporting a rise – down from 7%. Office demand fell from 6% to a negative reading of 4%.
Nationally, more survey respondents reported a fall than a rise in enquiries – with the net balance falling to minus 10% from a positive 7% in the first quarter. Confidence in the outlook for lettings has also fallen for first time since the second quarter of 2009 – with the balance at minus 7%.
Enquiries into space in Yorkshire fell across all markets, which in turn affected confidence in the retail and industrial sectors.
However, a significant rise was reported in the office market with 11% of the region’s surveyors hoping for an improvement in lettings over the next quarter. That’s up from a negative reading of 3% in the first quarter of 2010.
The availability of space for occupation picked up, driven by increasing space in the north and the Midlands.
Available space increased at slower pace in the south, while it broadly stabilised across all sectors in London.
Alex McNeil, of Huddersfield property agency Bramleys, said: “Increasing supplies of vacant secondary offices are weighing heavy on rental levels.
“The increasingly rare number of tenants are aware of their position and trying to turn this to their advantage by insisting on greater incentives and driving rents down.
“The fall out from public sector cuts is likely to worsen this.
“Demand remains for smaller suburban retail units in sharp contrast to the increasing voids in town and city centres and shopping centres.”