North market stable but London booms

Aug 8 2007

by Graeme King, The Journal

DEMAND for commercial property in the North-East remained steady in the second quarter of 2007, while the London market moved ahead, apparently showing a widening of the North/South property divide. The findings come from the latest quarterly survey from the Royal Institution of Chartered Surveyors (RICS) based on feedback from hundreds of its members working in the office, retail and industrial property sectors. The most obvious geographical split is in the retail sector. Across the UK commercial property sector, 13% more chartered surveyors reported a rise than a fall in overall demand, down slightly from 16% in the last quarter. In retail investment demand is picking up in London whilst declines are apparent in the North-East and most other UK regions. The booming financial services economy has led to a breakaway of the London market as a confident labour market refuses to bow to rising interest rates in the capital. Meanwhile, the North-East has seen a fall in demand, a reduction in occupier enquiries, and an increase in available retail floor space, with an expectation that rents will fall. In the office sector in the North-East there has been a fall in demand and occupier enquiries as well as an increase in available floor space. The North-East has also seen the biggest pick-up in the starts of new office development. Yet against this trend, more than 50% of chartered surveyors questioned in the region are confident that rents will increase. Story continues ADVERTISEMENT Kevan Carrick, a spokesman on commercial property for RICS in the North-East, said: “The property market here is not as strong as that emerging in London for a number of reasons. We tend to suffer from lower peaks and deeper troughs. We also find that on the rise the market lags a few months behind London activity, but falls back very quickly. Overall, the market in the North-East remains stable.”

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