UK business are predicted to come under increasing pressure from rising rents as the economy gathers pace and competition for space heats up, the Royal Institute of Chartered Surveyors (RICS) has warned.
In its latest commercial market survey, RICS forecasts that UK rental values will jump by four per cent over the next 12 months.
Businesses within the office and industrial sectors are likely to face the biggest rental hikes at around five per cent and 4.25 per cent respectively.
London will be the worst hit region, with rents expected to rise by six per cent across the capital.
The survey revealed that 62 per cent of respondents in London now sense the market is becoming overpriced to some extent, rising to 73 per cent when asked about central London alone. This compared with the 50 per cent in the previous survey.
The news comes after separate research from BNP Paribas Real Estate last week revealed that London office vacancy rates dropped to a 15-year low during the third quarter of the year.
RICS chief economist, Simon Rubinsohn said that while “not particularly welcome” rent rises, as a bellwether for the UK economy, highlights some “very reassuring growth patterns”.
“Nationwide, we’re seeing a solid increase in demand for commercial properties across retail, office and industrial sectors. In other words, at the moment, however badly rental costs might pinch, they do not appear a barrier to growth.”