Office demand is rising at its fastest rate in four years, according to the RICS Fourth Quarter 2004 survey.
RICS said that the office market had picked up steadily in the period, and that the London market was “still supporting the recovery, reporting the most consistent rises in demand”.
Surveyor confidence in the office sector was also at its highest level since Q4 1997.
But the RICS said that retailers were “feeling the pinch” from rising interest rates and higher levels of debt pushing prices down.
“Some are looking for lower overheads and increased sale volumes in out-of-town locations and from the high street,” it said.
Meanwhile, the survey found that the strong demand for rented property “had not prevented further declines in lease lengths”, and that inducements offered to new tenants are “still generous”.
RICS economist Milan Khatri said: “Office demand is still driving the commercial sector, although the industrial and particularly retail sectors look set to pick up in 2005.
“Fears of an economic relapse seem so far unfounded as rising real estate demand points to improving corporate confidence.”
Khatri added: “The picture is consistent with a steady recovery in the UK economy. Occupier demand for property is rising steadily but investor appetite for commercial real estate is booming.
“An influx of funds from pension funds and private individuals reflects disappointment with recent performance of equity markets globally.”
References: EGi News 26/01/05
