Demand for commercial retail property remained subdued in the first three months of 2012 and with growing supply availability a further drop in rental expectations is expected, according to the latest RICS UK Commercial Market Survey.
Potential tenants for retail units continued to fall in the three months to March as a net balance of 11 percent more surveyors reported reduced demand for retail property alongside increasing availability of unoccupied floor space.
As such rental expectations for the retail sector were firmly negative with 28 percent more surveyors predicting falls rather than rises in rental values over the coming three months and in every region in the UK.
Surveyors reported that problems in obtaining affordable finance as well as uncertainty over the economic outlook are holding back potential occupiers.
With general activity remaining subdued, overall rental expectations were once again downbeat as 14% more respondents are predicting commercial retail rents to fall rather than rise over the coming three months.
Commenting on the survey, Simon Rubinsohn, RICS Chief Economist, said: “The retail property sector continued to suffer in the early part of the year with falling demand resulting in the continuing negative outlook for future rental values and activity. With the government’s response to the Portas Review having been announced, it remains to be seen what impact this will have on the high street and the retail sector as a whole.
“Across many parts of the country, it seems that the commercial property sector in general is continuing to struggle, with a lack of affordable finance proving a big barrier to growth.”