Demand for commercial property in the South West rose strongly during the first three months of this year, according to the latest RICS UK Commercial Market Survey.
Some 20 per cent more surveyors in the region reported increases rather than falls in demand, up dramatically from the previous three months. Demand for industrial space grew at the fastest pace.
Despite the growth in demand, it was insufficient to counteract increases in available floor space, with 9% more surveyors in the South West reporting a rise in space than a decline. Office space showed the biggest increase.
As a result, expectations for rents in the region continued to slide for the 14th consecutive quarter, with 20 per cent more surveyors expecting rents to fall rather than rise.
Surveyors also suggest that an unwillingness by banks to lend at competitive rates is continuing to discourage investors, which is being particularly reflected in a depressed market in secondary property. Across the South West, capital values have now recorded consecutive negative readings since the second quarter of 2007.
Andrew Kilpatrick of Thompsons in Swindon, said the year had started well, with a rise in occupier inquiries across all sectors of the market.
"Whether this welcome increase in activity is translated into more deals remains to be seen, so the outlook is tinged with cautious optimism," he said. "A number of longer-term projects for Swindon are gradually inching forward in anticipation of improved market conditions and future demand. Among these is a planning consent for a new 95,000 sq ft office building on a site previously allocated for residential development. If built, this will be the first new town centre office development in Swindon for many moons."
James Gregory, RICS South West spokesperson and partner at Alder King in Swindon, added: “The survey does encouragingly suggest that take up of accommodation is growing in the South West, particularly for the industrial sector. However, there is in many areas an over supply of property in the market and this imbalance between supply and demand will continue to impact on commercial rents in the region.”
