The Royal Institution of Chartered Surveyors says that demand for retail premises continued to decline in the three months to the end of June. Their UK Commercial Market Survey will make poor reading for landlords of empty shops in most parts of the country.
The shortage of potential tenants means that landlords are having to offer incentives like rent free periods or assistance with decorations and fit out costs. The surveyors believe that the outlook for rents is depressed with a net balance of 28 % more respondents predicting values to continue to fall over the coming three months. Our landlord insurance clients tend to concentrate on the residential let property market but some may be tempted to dip a toe in the water of the commercial market. The RICS website would be a good place to start if you are keen on researching the market.
Demand for commercial property remained subdued according to the RICS survey. They found that 7% more surveyors saw a fall rather than a rise in interest from potential occupiers. As with the residential sales market, London seems to be a different market from the rest of the country. Demand for prime offices is strong and there is apparently a shortage of supply. The economic worries in the UK and Eurozone are clearly discouraging people from taking on tenancies. Until confidence returns it looks as though potential tenants will have the upper hand in negotiations. Residential landlords have the benefit of knowing that at least everyone needs somewhere to live. Commercial landlords have found out the hard way that the decision to take on the commitment of a lease is very much an optional activity and people will only do it if the deal looks really good.