A mixed outlook of the commercial property sector has been presented after analysis of the first quarter, with optimism on the supply of property and increase in demand forecast for the sector’s immediate future.
NAEA Propertymark commercial members were asked to provide their views on supply and demand levels within the sector over the next 12 months. 50 per cent anticipated a boost in supply whereas roughly one third forecast a corresponding boost in demand.
Propertymark’s latest quarter one 2024 commercial outlook consists of a variety of figures that present a mixed view of the sector’s imminent future, according to the membership organisation for estate agents.
Regarding the office sector, 40 per cent expected an increase in supply, whilst 80 per cent suggested that demand would shrink or stay the same.
Nathan Emerson, CEO at Propertymark, said:
“Member sentiment varies by sector, but there is notable positivity in the Land and Yards and Industrial sectors.
“Supply and demand imbalances remain, most notably in the pubs and restaurants sector, which continues to be impacted by changing trends. However, as the economy stabilises, we remain optimistic about the outlook for the UK commercial property sector.”
In the takeaway sector, 27 per cent of members surveyed expect an increase in both demand and supply. But in the industrial sector, 50 per cent of members forecast a surge in demand and 25 per cent anticipate an increase in supply.
With capital values, sentiment in the land and yards and industrial sectors is positive, but in the pubs and restaurants sector, there is a rather bleak outlook, with sentiment declining further since the last quarter., according to the organisation.
The same positive sentiment remained in the industrial, land and yards sectors regarding rent levels. The office and takeaway sectors remain negative about rent levels, however
Meanwhile, 58 per cent of members reported that rents are increasing following rent reviews in Q1 2024. Only 16 per cent specified that they are decreasing as a result of rent reviews.
Michael Sears, Commercial Advisory Panel Member, comments:
“Appetite for town centre retail is still predominantly from local business, but there have been some encouraging signs that brands have started to step up activity. Demand for larger open plan offices remains poor but there has been a resurgence in demand for smaller offices in business centres.
“With the government’s proposals for high street rental auctions due to hit the market from September, the devil will be in the detail of how the mechanics of this might work. We need to avoid the unintended consequence of pushing price, rents and thus investment and regeneration of town centres down.”
