North confident as others worry

Apr 23 2008 by Graeme King, The Journal

DEMAND for commercial property in the North East has remained steady, or even increased in some sectors, despite national research showing the fastest decline for six years.

That is the picture emerging from the latest Rics Commercial Property Survey where a balance of +30% reported a fall, in demand compared with a balance of -15% in the fourth quarter of 2007.

All sectors saw a fall for the second consecutive quarter, with retail suffering the largest decline, dropping to the lowest balance in the survey’s history.

The continuing credit turmoil and a slowing housing market are clearly weighing upon both retailer and consumer confidence. New occupier inquiries also fell in all three sectors nationally for the second consecutive month and at a faster pace. Financial turmoil is said to have affected decision making, with many re-evaluating their demand for commercial property space.

The North East bucked the general trend, with inquiries, demand and general confidence unchanged on the previous month.

The region also comes out top for the number of office developments on which construction has started in the past year. Retail remained relatively steady, while the industrial sector saw more occupier demand, assisted in part by more inducements to prospective tenants and buyers. Kevan Carrick, a partner in JK Property Consultants and policy spokesman for Rics North East, said: “There is nothing new in the North East going against the national trend, and in this case it is something to be welcomed.

“Confidence remains relatively high across all sectors and this is borne out by demand, but we can’t afford to be complacent as the continued demand for property will depend very much on occupier confidence.

“Ultimately, the regional market will be subject to external pressures and we must work hard to ensure that the current position of strength is maintained.”