There are two UK property markets crashing right now. The residential crash gets all the attention, but the commercial property crash is more violent.
Today, the RICS produced their regular survey looking at commercial property market conditions, covering the second quarter of this year. Here are just a few hightlights of this grim report:
Tenant demand for commercial property declined at the fastest pace in the survey’s history (since 1998).
The amount of available floor space is rising across all market sectors.
Confidence in the outlook for occupier demand and rents reached the lowest levels respectively in the survey’s history.
Rental expectations experienced the "sharpest turnaround in the office sector with expectations for London offices the weakest across England."
The value of inducements increased at the fastest pace in the survey’s history (1998), with the largest increases taking pace in the office sector.
Lease lengths declined at the fastest pace in the surveys history (1998), with the largest declines taking place in the retail sector.
Both investment demand and capital values declined at the fastest pace since the credit crunch got underway.
Commercial property prices have tumbled in the last 12 months. Today's RICS survey suggests that things are about to get much worse.
8 comments:
Yes they have tumbled, but by how much? Have they hit 20% y-o-y yet?
This is only a market conditions survey. Free commercial property data is hard to find.
Note that a consortium of high street retailers are now lobbying to avoid paying full rent. Desperate times.
Nick
Alice, try CB Richard Ellis Monthly Reports!
Ooops. this is better.
About 10years ago my friend (an RICS member) went apoplectic and apes**t all in one go when I said that my farm rent had left me "high and dry" after a drop in produce prices and that I was seeking a way to somehow reduce my rent.
He defended the rent system(he was involved in commercial property)as if it was his own child-it was really quite strange.He went on to tell me in no uncertain terms that I had no chance.
It seems they (RICS) have the rental system really stacked in their favour-upward only rent reviews for example-so much so that any whiff of a change of rules would affect the very fabric of their business model-well I've got news for the RICS-YOU CAN'T BUCK THE MARKET.
WUASTC
Even without the survey results you can see this quite easily from the top deck on a bus ride through the City of London - my morning journey takes me past at least 20 sites all promising "Premium office space" - who did the developers think was going to fill it all?
This is only a market conditions survey. Free commercial property data is hard to find.
Agreed
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