Market downturn intensifies as economy slows
Tenant demand for commercial property declined at the fastest pace in the survey’s history (since 1998) in the second quarter, as did enquiries to occupy commercial premises.

Demand and enquiries were weakest in the retail sector and fell back to a lesser degree in the industrial and office markets, as the economic slowdown reduced business expansion.

Surveyors continued to report a rise in the amount of available floor space in Q2 across all sectors, although growth in availability did not accelerate any further, having hit a ten-year high in Q1.

This figure masks variations between the sub-sectors however; relatively strong increases in availability took place in the retail sector while the increase was rather more modest in the industrial and office markets growth in Office availability is still only half that reported following the dotcom bust.

Confidence in the outlook for occupier demand and rents reached the lowest levels respectively in the survey’s history. In both cases, confidence was most depressed in the retail market although fell back to record survey lows in both the industrial and office sectors.

Rental expectations experienced the sharpest turnaround in the office sector with expectations for London offices the weakest across England.

However, office markets countrywide have witnessed a sharp reassessment in the rental outlook as the economic slowdown has broadened to areas of the economy outside the financial sector.

The value of inducements increased at the fastest pace in the survey’s history (1998), with the largest increases taking pace in the office sector.

Rising inducements was also recorded at a faster pace in the in the industrial and retail sectors as tenants bargaining power has picked up.

Meanwhile, lease lengths declined at the fastest pace in the surveys history (1998), with the largest declines taking place in the retail sector, and the smallest declines taking place in the industrial sector.

Both investment demand and capital values declined at the fastest pace since the credit crunch got underway.

This pattern was evident across all three sub-sectors of the market at a similar pace.

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