20 November, 2024

Sharp Falls In Commercial Rents Expected Across Office And Retail Sector

The Royal Institution of Chartered Surveyors (RICS) have reported from a poll that their surveyor members have similar negative expectations for office and retail rents this year as they did in 2008. With office space rents potentially falling by up to four per cent for prime and seven per cent for secondary space and retail rents expected to drop by up to fourteen percent.

Falling tenant demand because of structural economic changes to both working and shopping habits during lockdown across all sectors is the reason for this elected impact and includes industrial space that recorded its first real negative fall since 2012.

The RICS quarterly poll of its almost 500 chartered surveyor members discovered that around three-quarters view the commercial rental market to be in a period of decline with more than a tenth reporting they think the cycle has reached the bottom.

The sudden and unexpected change to remote home working took everyone by surprise and raises questions across the whole office sector as employees have got used to not having their commute to work in a crowded commuter train. And giving everyone a taste of what life could be like working from home.

And it won’t all return back to normal coming out of lockdown as RICS’ members report that they predict offices would be tempted to move to the suburbs from City centres in post-pandemic forward planning.

There could be a boost in secondary retail spaces because of the potential in the planning rule changes to give potential to shops to be converted into residential housing.

The question now is, will this be a permanent or just a temporary blip for the commercial rental sector. Only time will tell.


Business Talk

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