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Demand for retail premises falls as high street continues to suffer

This was coupled with a marked upturn in unoccupied floor space, as a net balance of 20 percent more surveyors reported rises in availability. Unsurprisingly, this resulted in a continued fall in rental expectations (-28 percent).

Nationally, overall demand for commercial property continued to stutter, with nine percent more surveyors reporting falls rather than rises in interest from potential occupiers. Seemingly, the ongoing challenges surrounding the UK economy continues to weigh heavy on businesses and their appetite to expand.

As a result of this negativity, surveyors’ expectations for future rents continued their slide, with a net balance of eleven percent predicting values to drop over the coming three months. Overall rental expectations have now remained negative since the autumn of 2007.

In London, which has been a more resilient market than other areas of the country, fresh demand for commercial property space in general fell in the third quarter with the negative net balance reading slipping to a two year low. Significantly however the appetite for prime office space in the capital remains firm.

Turning to the investment market, the negative picture continues for most parts of the country, with capital value expectations falling in all areas with the exception of London, the market being underpinned as it is by considerable overseas investment.

Simon Rubinsohn, RICS Chief Economist said:

"Unsurprisingly, with the retail sector still struggling to find its feet, fewer companies looked to take on new premises last quarter and, consequentially, the amount of empty floor space continued to rise. This was the case in most parts of the country and it was a similar story for the commercial property sector as a whole.

"Of particular note was the downturn in demand that was seen in London. The capital has typically managed to keep its head above water better than most other parts of the country but interest from occupiers away from the prime office sector fell last quarter."

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