The latest RICS UK Commercial Property Survey again paints a picture of disparity in occupier demand across the various sectors, although the prevailing sentiment across all sectors is one of cautious optimism.
As with previous reports, the industrial sector continues to report growth in occupier investor demand. The industrial sector is suffering a lack of supply of available, leasable space, which is behind a forecast rental growth between +3% and +5% over the coming year.
Whilst demand for offices still remains in negative position at -3% overall, demand trends are more stable than in previous quarters. Nevertheless, prime and secondary office rents are forecast to fall between +1% and +3% over the forthcoming year nationwide.
Demand for retail property is reported at -25% across the country. The continued levels of available retail space is creating an oversupply, whereby retail rents are forecast to decline with country-wide expectations between -5.5% and -8% over the next 12 months. Locally, demand within the secondary retail market is bucking this trend which is helping to hold rents up.
Strong investor demand for industrial property is underpinning an expectation of continued capital value growth for this sector. The investment demand outlook for offices has improved, influenced by the easing of lockdown conditions and changes to permitted development rights for residential conversion. Locally, there remains strong demand for retail investments, particularly from cash buyers.
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