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RICS: Demand for North West industrial property & office space increases

Demand for industrial property and offices in the North West increased during the last quarter of 2018.

That’s according to the latest RICS (Royal Institution of Chartered Surveyors) UK Commercial Property Market Survey.

However, despite a rise in industrial and office space requirements, interest in the region’s available retail premises continued to fall.

RICS says changing shopping habits and political uncertainty has contributed to the drop.

During the last quarter of the year (Q4 2018), 32% of the region’s commercial property surveyors reported a rise in occupier demand for industrial property (up from 24% in Q3 2018), whilst 15% also saw an increase in demand for offices (up from 12% in the previous quarter).

However, over half of respondents (51%) reported a fall in demand for retail premises in the North West in the last quarter of 2018 (up from 39% in Q3 2018).

Despite demand for industrial units and offices increasing during the last quarter of the year, commercial property surveyors in the region reported a lack of availability for both property types.

Yet available retail premises continued to edge up in Q4 2018, with 42% of respondents seeing an increase in available retail space (up from 30% in Q3 2018).

Reflecting the decline in retail, respondents trimmed their expectations for rental growth in the sector, with 42% expecting rents for prime retail space to fall over the coming 12 months and 52% anticipating rents for secondary retail stock to fall over the same time frame.

Rent expectations for industrial and office space are more positive, with 65% of respondents expecting to see rents for prime industrial units increase during the year ahead, and 47% anticipating a rise in rents for prime office space over the next 12 months.

Tarrant Parson, RICS economist, says: “The latest feedback suggests that the lack of clarity over the Brexit process remains a key factor weighing on the commercial property market, with potential occupiers adopting a wait and see approach before committing.

“This comes in addition to the ongoing structural changes which continue to take their toll on the retail sector, evidenced by the further rise in vacant space shown in Q4.

“On the flipside, the industrial sector, which is a clear beneficiary of the shift towards online shopping, continues to attract solid demand growth from both investors and occupiers across all parts of the UK.”