RICS survey shows signs of recovery for UK commercial property market

15 May 2024

According to the latest RICS Commercial Property Monitor, the UK market saw some improvements in Q1 2024, but certain sectors are still grappling with industry challenges.

In Q1, tenant demand experienced a notable rise, increasing by +4 percent from the previous quarter's -7 percent net balance at the end of 2023. The industrial sector exhibited particularly positive signs, reaching its highest net balance since Q3 2022 at +14 percent, whilst office demand also saw growth for the first time since early 2022. London leads the way in both office and retail demand, although industrial property demand remains steady across most regions.

Projections suggest that rents will climb over the next year for both primary and secondary industrial sites, as well as prime office locations. However, factors like remote working and the ongoing impact of Minimum Energy Efficiency Standards (MEES) continue to influence the commercial office sector. Tenants increasingly favour prime, energy-efficient spaces to minimise energy expenses and potential retrofitting costs. In terms of rent expectations, London outpaces the rest of the country, with a +54 percent projection, marking the strongest reading for Central London prime office rents since Q1 2016.

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