Demand for Commercial Space Grows at Fastest Rate in Five Years

A recent RICS report reveals industrial space drives soaring demand with office space also seeing a recovery.

According to the Royal Institution of Chartered Surveyors (RICS), the demand for commercial space grew at the fastest rate in five years during the second quarter of 2021.

A survey was conducted by the RICS which identified that +16% of respondents reported growing occupier demand, compared to -5% in the previous survey, marking the strongest increase since 2016.

Confidence seems to be rising across all commercial property sectors, with 56% of respondents saying they now sense that the market conditions are consistent with an upturn. This is compared to 38% in the first quarter RICS survey.

While the troubled office sector had recovered its score to a balance of -3% for occupier demand in the second quarter in comparison to the -34% in quarter one, respondents now expect rental growth for office space in central locations such as London.

These figures will calm the nerves of major office developers and suggest early signs of recovery for the office market, following the lifting of COVID restrictions back in July.

They come on the back of the latest RIBA Future Trends report which uncovered that architects felt optimistic about the commercial sector, posting a figure of +13, the highest since the EU referendum.

Meanwhile, the RICS survey had found that industrial property has continued to be the strongest performing sector with an astonishing +63% for demand, which is six points higher than the first quarter.

In addition, respondents also expected industrial rent to rise by 5% for prime space and 3% for secondary space over the next 12 months, amidst the continued growth of online shopping and logistics centres driven on by the pandemic.

However, for the retail sector more gloomier results were uncovered. Respondents expect rents to drop by -5.5% for prime space and -8% for secondary over the next year despite occupier demand improving from -55% in quarter one to -25% in quarter two.

Mark Richardson, Partner at BB&J Commercial said, “these results demonstrate the continued growth of confidence in the UK commercial property market.”

“Aided by the growth in online sales that we have seen throughout the pandemic, demand remains strong in the industrial sector, producing strong expectations for both rents and capital values for the near future.”

“Although changes to work and lifestyle preferences have changed the level in demand for the retail and office sectors, a more stable demand picture coming through this quarter shows that trends may be turning into a more favourable direction.”

“At BB&J Commercial we have been fortunate that we have seen properties fly off the shelves, some deals have even completed before the property could go to market! With this kind of demand, we hope to see more stock come our way and assist with the disposal of more commercial property and land.”

Now has never been a better time to sell or let your commercial property or land. If you need assistance with the disposal, contact us today on 01332 292825 or where one of our property specialists will help you every step of the way.


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