There’s more gloom to come

May 12 2009 by Sue Scott, Evening Gazette

TOUGH times are continuing in the commercial property sector, according to the Royal Institution of Chartered Surveyors.

In its latest commercial property survey, it said tenant demand across all sectors continued to fall in the first quarter - although the pace of decline eased back.

RICS said surveyors expect rental declines to accelerate on the back of a record increase in available floor space.

The net balance of surveyors reporting a rise in available floor space rose at the fastest pace in the survey’s history with 65% more chartered surveyors reported a rise than a fall in available floor space, up from 57% in the last quarter.

The ongoing contraction in the economy and the continuing rise in available floor space have weighed on surveyor expectations for the rental outlook.

Surveyors are now more pessimistic than ever before with 80% of surveyors expecting a fall than rise in rents.

Commercial property sector spokesman for RICS North East, and partner in JK Property Consultants LLP, Kevan Carrick said: “The national picture remains depressed and the North-east reflects this trend as tenant demand continues to ease and the availability of space increases.

“However, it cannot be said that there is no activity at all in the North-east market place.

“Despite the poor market, space is still required and landlords are being realistic.”

He added: “It is highly frustrating that the Government did not use the opportunity in the Budget to take action against the imposition of empty property rates which is single handily the biggest issue facing the commercial property market - not just in the North-east but across the UK as a whole.

“The empty property rates burden is preventing businesses from moving around if they want to expand or contract and developers are being halted from building new space as the risks are too high.

“It is doubtful that we will see any improvement until confidence and investment return to the market and demand increases and empty property rates are reduced or removed completely.”