A recent survey of the UK commercial property market has revealed a bit of mixed picture, with occupier demand falling in the office and retail sectors but conditions remaining firm in the industrial segment.

According to the survey by RICS, occupier demand was broadly flat at the all-sector level during Q2 of 2017, following only modest increases in each of the last three-quarters.

Looking at the figures in more detail, they show a disparity between sectors, with a fall in demand for offices and retail space, offset by reasonable growth (net balance of +18%) in demand for industrial property. However, the pace of growth for industrial space has apparently slowed compared to the previous three-quarters.

It is a similarly mixed picture when it comes to near term rent expectations, with the outlook for industrial space remaining firm with 29% more respondents expecting to see a rise in rents, while a slightly softer trend is expected for offices and the retail sector.

Some respondents attribute the drop in demand for retail space to the rise in online shopping over recent years. However, this greater shift towards online shopping appears to be supporting demand in the industrial sector, with respondents noting a squeeze in the supply for leasable space in this area – a trend that has been prevalent since 2012.

“The commercial property market has enjoyed a good run and it's hardly surprising that we are now seeing a flatter trend emerge in the responses to the survey, which chimes both with recent economic news flow and the political environment,” commented Simon Rubinsohn, RICS Chief Economist. “That said, the underlying picture remains fairly resilient, which is highlighted by the fact that medium term rent expectations are still holding up, particularly for prime space.”

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Source:

http://www.rics.org/uk/news/news-insight/press-releases/economic-and-political-uncertainty-clouding-commercial-property-outlook/