Member Article

‘Resilient’ economy drives up Yorkshire clamour for retail space

According to a new report by RICS (Royal Institution of Chartered Surveyors) the UK’s resilient economy is driving tenant demand for retail space for the sixth consecutive quarter in the north of the country.

Tenant demand for retail space in Yorkshire and Humber continued to rise during the last quarter (Oct-Dec 2014), according to the latest RICS (Royal Institution of Chartered Surveyors) Commercial Market Survey, with 39% more surveyors also reporting a greater investment interest in all commercial property sectors in the region.

30% more chartered surveyors reported a rise in the occupier demand for retail premises in Yorkshire and Humber in Q4.

However, the pace of tenant demand growth for industrial property eased slightly over the last three months (from 51% more respondents reporting a rise in Q3 to 40% in Q4), along with the pace of demand for offices (from a net balance of +38 in Q3 to +29 in Q4).

Nonetheless occupier demand remains firm and, as a result, rent expectations are positive across all sectors.

Within this, the industrial sector returned the strongest results with 32% more respondents expecting rents to increase over the next three months in the region.

Richard Corby of ES Group in Leeds said: “We are now at a stage in the market across most of the Yorkshire region where both occupier and investment activity is becoming frustrated or constricted by a lack of stock.

“We are seeing a healthy level of enquires from both investors and occupiers, however, we still need to see more new stock come to the market to meet the needs of both, especially grade A office space and large industrial premises.

“Of particular concern is the reduction of office space in towns like Harrogate, due to conversion of the accommodation to residential uses under Permitted Development Rights.

“Over 50,000 sq ft of office space will be lost in Harrogate – representing a significant proportion of the more modern office stock in the town.

“Meanwhile, rents are not yet at a level which justifies development and there is no land supply for employment use, so no new office space will be developed to replace it.”

Simon Rubinsohn, RICS chief economist, commented: “Looking forward, domestic economic conditions are set to remain relatively favourable, with 2015 expected to bring another year of solid GDP growth and further improvement in labour market conditions.

“Moreover, the recent disinflationary pressure is likely to mean interest rates stay on hold for the best part of the year, providing further support to the market.

“However, uncertainty over the upcoming general election is a potential risk to activity and global challenges should not be overlooked.”

This was posted in Bdaily's Members' News section by Clare Burnett .