RICS (Royal Institution of Chartered Surveyors) is calling for the government to help the North West’s commercial property market by reviewing business rates.
Ahead of Monday’s (29 October) Budget, the organisation has voiced concerns over the effect the ongoing uncertainty surrounding Brexit is having on the region.
The Q3 2018 RICS UK Commercial Property Market Survey shows tenant demand for offices, retail space and industrial property have all been falling over the last quarter.
During the third quarter of the year, 13% more survey respondents reported a rise in office space demand (down from 14% in Q2), whilst 25% reported an increase in demand from industrial space (down from 30% in Q2) and 35% saw a decline in occupier demand for retail property.
Tough market conditions and the boom of online retailers are believed to have prompted struggles in the retail sector, and some landlords are offering incentive packages for retail property.
RICS says a review of business rates would provide a ‘much-needed boost’ for the high street and wider commercial property market, and would help ease the burden on companies.
Hew Edgar, head of policy at RICS, says: “People want a vibrant high street at the heart of their community. Yet the combination of Brexit uncertainty and competition from online retailers mean small independent businesses, in particular are finding it harder to stay afloat.
“That’s why we are calling on the government to use the Budget to review business rates, with the aim of improving the whole system and help provide a shot in the arm for our ailing high streets.”
In terms of investments, the RICS survey shows that all commercial property types – except the struggling retail sector – attracted a rise in enquiries.
An increase in investment enquiries for industrial space was reported by 19% of respondents (up from 9% in Q2), and 30% saw a rise in enquiries from investors for office property.
The lack of available office and industrial space across the North West is expected to impact rents over the next three months, with 17% of respondents expecting office rents to rise (up from 7% in Q2) and 32% expecting industrial property rents to rise.
Retail rents are not predicted to rise over the coming three months.
Tarrant Parsons, a RICS economist, adds: “The commercial real estate market continues to be characterised by a stark contrast between the struggling retail sector and the strong performance of industrial property.
“The uncertainty engendered by the ongoing Brexit process now appears to be having a greater bearing on tenant decisions when it comes to taking up commercial space, with a lack of clarity regarding the final trading relationship causing some hesitancy.
“That said, investment activity remains reasonably solid, as the latest results point to a stable quarterly trend in demand and a continued decline in supply.”