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Positive signs for UK commercial as office demand stabilises

The UK commercial property market sees further signs of recovery as restrictions lift, with 56% of respondents to the Q2 2021 RICS UK Commercial Property Survey reporting the market is in an upturn.

This is mirrored in investor appetite as 15% of contributors reported an increase in all-property investment enquiries over the quarter. Unsurprisingly, the industrial sector still leads the way (net balance of +64%) and is the strongest reading on record. Office sector investment demand also picked up from -18% in Q1 to +4% in Q2, pointing to a more stable trend coming through.

Across all sectors, occupier demand recorded the strongest reading since 2016, with a net balance of +16% of respondents reporting a pick-up. Demand trends are now beginning to stabilise across the office sector, mostly for prime space.  Interestingly, there is now a positive demand for office space in the South (+7%), and the net balance in London is flat (-3%), up from a net balance of -79% in Q4 2020.  As in previous surveys, industrial property continues to lead, with both investor and occupier demand growing again. Now retail has fully reopened, only -25% of respondents reported a fall in demand, noticeably less downbeat than -55% in Q1.

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