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Commercial market is falling at the fastest rate for 10 years

Demand for commercial property is falling at the fastest rate in a decade, according to the Royal Institution of Chartered Surveyors.

The Q3 RICS Commercial Property Survey found that the number of surveyors reporting a fall in demand was 52 per cent higher then the number reporting an increase.

This compared with the Q2 figures which showed that 50 per cent more surveyors were reporting a fall in demand than an increase.

A year ago, the number of surveyors reporting a decrease was only 1 per cent more than the total reporting growth in demand.

All sectors remain in negative territory for the fourth consecutive quarter, with the industrial and office sectors dropping to the lowest balance in the survey’s 10-year history.

The worst-hit area is retail, with 59 per cent more chartered surveyors reporting a fall than a rise in demand, a slight improvement from 63 per cent in Q1.

The worst-affected region in the retail sector is the Southwest, where 81 per cent more surveyors reported a drop in sales and lettings.

The North-east and East Anglia are the least affected – 33 per cent more reported a decrease in each region.

Andrew Hosking, of Torbay-based Stratton Creber Commercial, said: “The regional retail market continues to be battered by the credit crunch and a terrible summer season.

“The industrial and office sectors are holding up and we are seeing a reasonable level of new enquiries.”

The supply side of the market is also making surveyors nervous as the amount of available floor space is increasing at the fastest pace in the survey’s history, with the retail sector leading the way.

Some 33 per cent more chartered surveyors reported a rise in available floor space compared with 27 per cent more in Q2 and just 2 per cent more a year ago.

Oliver Gilmartin, senior economist at RICS, said: “The ongoing drag from the credit crunch is permeating through rental sentiment across all regions and sectors.

“This is especially true in the central London office market where recent worries over the health of the hedge fund industry is only adding to the sense of pessimism.”