The RICS Commercial Market Survey for Q2 2014 reports that the recovery in the commercial property market is becoming more balanced, with momentum building to areas outside London and across the different sectors of the market. Tenant demand in the occupier market remains firm, with the industrial sector exhibiting the strongest results. At the same time property availability appears to be contracting at the fastest pace on record, particularly in the office and industrial sectors, with the supply of offices being reduced by conversion of office space into residential. The value of incentive packages offered to tenants continues to fall, for the fourth period in succession. As a result rental expectations have picked up further, suggesting rents will start to increase in the near term. There has also been an increase in speculative development, particularly in London where 71% of RICS members report an increase in speculative development, compared to the national figure of 38%.
In the investment market, the RICS Survey reports continuing increase in investment enquiries, which is likely to result in a greater number of transactions. For investment property, the greatest demand seems to be in the industrial and retail sectors, with the office sector slightly lagging behind. Investment property prices are expected to remain on an upwards slope as a result of the expected improvement in investment activity. The RICS Survey reports that investor’s attention has now moved into secondary and tertiary assets.
RICS Survey contributor, Andrew Kilpatrick of Kilpatrick & Co said “Swindon’s commercial property market is continuing to show signs of improvement, with the latest notable deal a letting of 10,538 sq ft of town centre offices at Station Square. Speculative industrial development has returned in the shape of a Glenmore small unit scheme at Westmead. The hotel sector has seen the closure of Menzies and Madison Hotels and the Holiday Inn at Coate one of the town’s gateway sites is also on the market.”
