More than half of respondents agree conditions are consistent with an upturn, according to the Royal Institution of Chartered Surveyors, RICS’ latest commercial property market survey.
In the second quarter, 56 per cent of survey participants predicted a recovery compared with 38 per cent of respondents from January to March.
Chief economist Simon Rubinsohn said: “Demand trends appear much more stable in the office sector relative to recent quarters, while the industrial sector continues to see sharp growth in interest from both occupiers and investors.”
A net balance of 16 per cent of the 506 survey participants reported a pick-up in occupier demand during the first three months of 2021 – the strongest aggregate demand since 2016. This was dominated by industrial demand at 63 per cent with retail and offices still reporting negative demand at 25 and 3 per cent respectively.
Respondents continued to cite a sharp contraction in the availability of leasable industrial space, with the net balance slipping deeper into negative territory at minus 48 per cent.
Prime office rents display marginally negative expectations for the year to come at minus one per cent with secondary office rents anticipated to fall by four per cent over the next year. Retail rents are envisaged to decline sharply, with expectations of a drop of 5.5 per cent for prime and 8 per cent for secondary.