The ongoing uncertainty surrounding the Brexit negotiations is taking its toll on the UK Commercial Property market, causing some hesitancy among tenants, according to the Q3 2018 RICS UK Commercial Property Market survey. Because of the continued uncertainty, RICS (Royal Institution of Chartered Surveyors) is calling on the government to review the business rates system in the upcoming Budget.
Brexit uncertainty is taking its toll at the headline level, as occupier demand fell slightly, with a net balance of –9% (down from -8% in Q2) reporting a fall. Breaking the three sectors down, demand from businesses looking to take-up retail space fell for the sixth successive quarter and demand for office space saw a marginal decline in interest. Once again, industrial is the only sector to see growth. Indeed, this quarter demand for industrial space continued to increase, extending a run of uninterrupted growth going back to 2012.
As tenant demand in retail continues to fall, a net balance of +39% of respondents reported a further rise in retail availability in Q3, prompting landlords to increase the value of incentive packages. Vacancy rates were stable in the office sector, although the use of inducement packages did increase slightly. Conversely, both availability and incentives continued to decline in the industrial segment.
To help provide a much-needed boost for the High Street and the wider commercial property market, RICS is calling on the government to review the business rates system in the upcoming Budget, and help ease the burden on companies and make it more transparent and workable.