In the survey, 50% more chartered surveyors reported a fall than a rise in demand compared to 31% in Q1 2008. All sectors reported falls for the third consecutive quarter with the retail, industrial and the office sectors dropping to the lowest balance in the survey’s history. The worst hit area continues to be the retail sector with 64% more chartered surveyors reporting a fall than a rise in retail demand, compared to 42% in Q1. The continuing credit turmoil and a slowing housing market is clearly weighing upon both retailer and consumer confidence.
New occupier enquiries also fell across all three sectors for the third consecutive month. Financial uncertainty has impacted upon decision making in the business community with many re-evaluating their demand for commercial property space. 54% more chartered surveyors reported a fall than a rise in new enquiries for offices compared to 36% in Q1.
Looking forward, surveyors continue to be pessimistic. Confidence in activity and in rental expectations fell across all sectors to the lowest levels on record.
Commenting, Simon Rubinsohn, RICS chief economist said: “The drop in tenant demand is indicative of the increasing pressure on business while the wider economic impact is starting to be felt in the drop in consumer confidence. Rental growth is on a downward spiral and evidence suggests that the levels of inducements are on the increase as landlords attempt to keep property occupied. The picture is looking depressed in the near term but investors are seeing yields begin to reach levels which will offer decent returns.”
