Occupier demand for commercial property in Wales is at its weakest level for three years.
The latest commercial property monitor from the Royal Institution of Chartered Surveyors (RICS) shows a net balance of minus 42% of surveyors in Wales reporting occupier demand falling in Q3 of this year, down from minus 19% in Q2.
There were declines across all subsectors, with a net balance of minus 20% in reported demand for office space, minus 21% for industrial space and minus 56% in retail space.
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A net balance of minus 25% of respondents expects a fall in rents over the next quarter. Both office rents and retail rents are expected to decline with a net balance of minus 50% and minus 56% respectively. However, for industrial a positive a net balance of 30% of respondents expects rents to rise.
On the investor side, a net balance of minus 35% of Welsh surveyor respondents reported an overall fall in investor enquiries over the past three months, down from minus 29% in the previous quarter. A net balance of minus 44% of respondents saw a fall in office space, minus 11% in industrial space, and minus 50% in retail space.
Looking ahead, overall capital values are expected to fall further, with a negative outlook for the three months ahead. A net balance of minus 40% of respondents indicated that they expect net capital values to fall over the next three months. Surveyors also said that capital values in both the office and retail sectors are anticipated to fall, whilst industrial space is forecast to rise, with a positive net balance of 22% of respondents expecting an increase.
Chris Sutton of Sutton Consulting in Cardiff, said: “Industrial remains the strongest sector of the commercial property market with offices and retail still adapting to changing demand. St Modwen is continuing their industrial speculative development programme with the completion of phase three of St Modwen Park in Newport comprising over 274,000 sq ft of grade A floorspace with quoting rents of £8 plus per sq ft. With photovoltaics installed and a target BREEAM Excellent rating the specification of these units have raised the bar for new floorspace in South Wales.”
Richard Baddeley of Richard Baddeley & Company in Colwyn Bay said: “We anticipate more growth for warehousing on Anglesey as a result of increased trade with Ireland following the freeport designation at Holyhead”.
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On the 海角视频 marketplace RICS senior economist, Tarrant Parsons, said: “The commercial property market continues to feel the effects of higher interest rates, still well above target inflation, and weak prospects for economic growth over the near term. As such, investment activity remains subdued, while occupier market trends are also now clearly softening.
" This general pattern is reported right across the 海角视频, with secondary office and retail premises seeing the brunt of the downturn, driven by both structural and cyclical dynamics. On a more resilient note, prime offices continue to outperform the secondary market, benefiting from a flight to quality post-pandemic and more attention around energy efficiency standards. Similarly, industrial demand is holding up better than other traditional sectors, even if the picture is far less buoyant than in recent years.”