Citation
(2002), "Expansion plans on ice as market chills", Property Management, Vol. 20 No. 5. https://doi.org/10.1108/pm.2002.11320eab.008
Publisher
:Emerald Group Publishing Limited
Copyright © 2002, MCB UP Limited
Expansion plans on ice as market chills
Expansion plans on ice as market chills
Tentative signs that demand for commercial property had stabilised at the beginning of the year have been eclipsed by negative business sentiment in the second quarter, according to RICS commercial property survey published on 23 July, 2002.
Chartered surveyors are often the first to detect signs of changes in the market, and by extension the economy, as they are involved in deals at an early stage.
A total of 12 per cent more chartered surveyors reported a fall in new sales and lettings than reported a rise. A further 11 per cent more reported rises in unoccupied space, a similar number reported falls in new enquiries and expectations for new sales and rental levels also took a dip.
London is the weakest link, dragging the figures down. But the big picture shows demand and confidence actually increasing in some areas, especially in the North.
Offices and factories were most effected with retail remaining relatively immune. Firms are putting expansion plans on ice although continued high levels of consumer spending have buoyed up the retail sector.
Landlords need not despair yet though. The market may be leaner, but the favourable swing towards tenants' terms and conditions is so far mild. Lease lengths are down from this time last year but the decline is very modest. There has also been a slight rise in inducements, such as rent free periods and help with fitting out costs.
New development has fallen slightly in the office and retail sectors, remaining flat in the industrial sector.
RICS chief economist Milan Khatri said: "The fact that activity has come off in the commercial property market is not good news for the wider economy. It is clear evidence that business expansion plans are limited due to a lack of confidence in the economic outlook over the mid-term. However, interest in commercial property as an investment has picked up as the stock market has fallen."