Nationwide availability of office space has declined for the sixth consecutive quarter and is doing so at its fastest pace since the late 1990s, according to the latest RICS Q3 Commercial Market Survey.

The rise in transactions of commercial properties being sold with Permitted Development Rights (PDR) appears to be compounding the lack of availability, with two-thirds of respondents to the survey suggesting that if PDR exemptions are not extended then availability of commercial properties will be impacted further.

In London, 20% of respondents said PDR transactions had led to more than 10% of available commercial properties being earmarked for conversion into residential use and a net balance of 51% of surveyors reported a rise in demand for office, industrial and retail space.

The picture across the UK appears increasingly upbeat, with the firmer tone spreading beyond the capital as the economic expansion gains greater traction. This is being reflected in rental expectations which are now in positive territory in all parts of the country in the office and industrial sectors but not for retail.

Simon Rubinsohn, RICS chief economist, commented: “While permitted development rights is helping in a small way to boost much needed housing supply, the latest survey suggests that it is also having the unintended consequence of contributing towards a shortfall of office space in some parts of the country. Feedback from members suggests that this is particularly marked in London and adding to the upward pressure on rents. Moreover, there is a belief that this problem will become more pronounced if existing exemptions are removed.”