Relief for commercial property sector as demand rises at last

The Royal Institution of Chartered Surveyors (RICS) has finally got some good news for the commercial property sector.

After 11 successive quarters of decline, demand for business premises rose over the final quarter of 2003, says its commercial property survey published today (Tuesday). The figures fuel speculation that a recovery is underway.

Four per cent more surveyors reported a rise in business demand for commercial property than a fall. Although the rise is slight, it follows an upward curve which began at the beginning of last year from a negative balance of 16%, and contrasts with a low of almost 40% more reporting a fall than a rise in quarter four 2001.

New occupier enquiries rose and surveyors expect rents in the first quarter of 2004 to rise for the first time in two-and-a-half-years.

The value of inducements offered to persuade tenants to sign on the dotted line continued to rise, but at a slower pace. Business occupiers can still get favourable terms, but the tide may be on the turn.

In London, 35% more chartered surveyors reported a rise in demand for office space than the previous quarter.

But rental outlook is still negative as the current oversupply of office property is acting as a brake on rent rises. Retail and industrial property activity remained largely unchanged.