Demand for commercial property in the North West remained strong during the second quarter of the year – but available office, retail and industrial space remained in sparse supply, according to the latest RICS Commercial Property Market Survey.
Forty percent of chartered surveyors in the North West reported an increase in demand for office space – up from 38 percent during the first quarter of the year (Q1), whilst 46 percent saw a rise in demand for industrial property (a slight decline from 48 percent back in Q1).
Meanwhile, demand for retail space fell slightly, with 28 percent more respondents reporting an increase in enquiries – down from 32 percent in Q1.
Encouragingly, chartered surveyors in the North West reported an increase in retail development starts across the region, but the survey revealed a lack of new industrial sites and new office developments.
Across the whole of the UK, but excluding the capital, 95 per cent of respondents believe that current commercial market valuations are either at or below fair value.
However, in London 50 per cent of contributors now feel that commercial property valuations are ‘expensive’ - an increase from 45 percent in Q1.
In the investment market, enquiries rose again with 55 percent more surveyors in the North West reporting an increase in prospective investors – some of which were from overseas.
Furthermore, as availability of commercial property continued to decline across the region, the tighter market conditions resulted in rental expectations edging upwards, with 34 percent more respondents in the North West expecting rents to rise over the coming three months.
Paul Marshall of Bolton Marshall in Rochdale said: “The market is showing signs of continuing recovery, particularly in the industrial sector. A shortage of good quality space coming onto the market is resulting in an upward movement in price levels.”
Simon Rubinsohn, RICS chief economist, commented: “The results of the latest survey suggest the price of commercial real estate will continue to move higher over the next twelve months and quite possibly by another ten per cent.
“Fortunately, the strength of the occupier market is providing some underlying support for the market.”
“Indeed, the feedback we are getting from around the country tells us that the economic expansion is continuing to broaden out with both tenant demand, and just as significantly, investor interest, rising in all areas, ” added Mr Rubinsohn.