Demand for commercial property fell at the highest rate in the past 6 years in the first quarter of this year, with office space being the worst hit sector, according to the Royal Institution of chartered Surveyors’ (RICS) commercial property survey.
Rental confidence, too, has fallen quicker than it has in a decade according to this survey. “The drop in tenant demand is a particularly worrying development. This raises the possibility that rental growth will continue to weaken as the level of inducements are raised in a bid to keep property occupied.’’ Says Simon Rubinsohn, RICs chief economist.
35% more chartered surveyors reported a fall than a rise in new enquiries for offices, a steep rise from 13% in the fourth quarter of last year. For the first time in four years, office space has become increasingly available – rising at the fastest pace on record.
”The underlying softness in the market will not have been helped by the ending off the tax relief granted for empty property. However while commercial property is likely to remain under some pressure for a while to come, from an investment standpoint yields are now approaching levels where they are beginning to offer some value.’’ Says Rubinsohn.
Tags: Empty office tax