Resilient economy drives firm real estate outlook in the North West

Having been asked by RICS to comment on their recent Commercial Market Survey in their press activity, I thought it would be an opportunity to share the results which certainly make welcome reading for the industry.

By Brent Forbes, director, Petty Chartered Surveyors.

Top line notes show:

• Tenant demand for retail space increases for the second consecutive quarter
• Fall in availability of space compounded further by Permitted Development Rights
• Strength of investment enquiries points to further material gains in capital values

Tenant demand for retail space in the North West rose during the quarter (Oct-Dec 2014), with 49% more surveyors also reporting a greater investment interest in all commercial property sectors.

30% of respondents reported a rise in the demand for retail premises in the North West. However, tenant demand for industrial property fell slightly over three months (from 51% in Q3 to 40% in Q4), along with demand for offices (from 38% in Q3 to 29% in Q4).

Development statistics across the region are beginning to improve, with more surveyors reporting a slight increase in the development of new offices and industrial property. However, more new commercial property across all sectors is needed in the region.

This, combined with a sustained period of rising investment demand, has resulted in a rise in capital value expectations (over the next three months) with 29% more surveyors in the North West expecting prices to increase over this period (compared with 26% in Q3).

Similarly in the occupier market, expectations remain generally buoyant. Despite a slight fall in tenant demand for industrial property over the last quarter (from 51% in Q3 to 40% in Q4), 32% more respondents expect rents for industrial space in the region to increase over the next three months.

This is consistent with the strength of the economy and the usual robust demand for industrial space, as well as declining availability which is, in part, linked to Permitted Development Rights. Office and retail rent expectations remain a little less firmer than those for industrial.