The Royal Institute of Chartered Surveyors’ Commercial Property Market Survey contained little evidence to suggest that the occupier market recovery will fade in 2007, says Capital Economics.

The office sector was the star performer. Both the confidence and demand balances rose to record highs (+38 and +35 respectively), while the rental expectations hit a six-year high of +43.

News in the industrial sector was mixed, but generally positive. The demand balance rose to a six-year high of +14. Slightly less encouraging were falls in new enquiries and lease lengths, and inducements and availability of space also increased. The rental expectations balance was +17, comfortably above the long term average of +10, pointing to solid prospects for industrial income returns.

The retail sector lags behind the others. Confidence and demand are muted, and new enquiries fell for the 11 th straight quarter in Q1. In addition, availability and the use of inducements both rose while lease lengths fell again. The rental expectations balance fell from +7 to 0 (the long term average is +6).

“Overall, today’s data support our view (and that of the IPF Consensus) that the occupier market recovery will continues this year, with all-property rents growing by around 4%”, said Kelvin Davidson, property economist for Capital Economics.