Demand for commercial property rises
Confidence in the North East's commercial property sector grew during the third quarter of the year as demand for all commercial property types increased, according to the Royal Institution of Chartered Surveyors.
Industrial property was the most sought after property type during the third quarter of the year (Q3) with 33 per cent of survey respondents in the region reporting a rise in demand for industrial property (up from 13 per cent in Q2).
Office space was the second most popular commercial property choice during Q3 with 14 per cent of respondents seeing an increase in demand (up from five per cent in Q2).
Meanwhile demand for retail space also grew in Q3, albeit modestly, with five per cent of respondents reporting an increase in demand (up from three per cent in Q2). Capital value expectations also recovered noticeably.
However, despite demand for commercial property increasing in the region – and capital values expected to increase - more chartered surveyors in the North East reported a further drop in availability of all commercial property types during Q3.
The number of new development starts also fell during the last quarter of the year.
Looking ahead, increasing demand for commercial property coupled with limited prime stock is likely to push rents higher over the coming year.
More than half of respondents (57 per cent) anticipate a rise in rents for prime industrial property over the next 12 months, with 43 per cent also expecting to see rents for prime office space increase, and 29 per cent are confident rents for prime retail outlets will rise.
Simon Rubinsohn, RICS chief economist, said: “The latest results suggest the commercial market has subsequently settled down which is broadly consistent with much of the other macro news flow that’s emerged over the past few months.”