London retail rents to drop as occupier demand falls
London retail rents are expected to dive this year as occupier demand has plummeted due to the coronavirus crisis, according to the latest research.
In the first quarter of the year, occupier demand for retail fell to a net balance of minus 75 per cent, while office space demand declined to minus 18 per cent.
Secondary retail rents in London are expected to fall around 13.4 per cent over the next 12 months, while prime retail rents are forecast to drop nine per cent.
Meanwhile, investor enquiries in London properties continued to slip, falling to a net balance of 16 per cent.
Industrial space proved to be more resilient to the coronavirus crisis than retail or office properties, according to a survey by the Royal Institution of Chartered Surveyors [Rics].
Occupier demand for industrial space increased 11 per cent, and prime rents in the sector are expected to rise 2.1 per cent in the year ahead. Research found that 15 per cent of respondents to the survey reported a jump in industrial space investor enquiries.
Rics chief economist Simon Rubinsohn said: “The seismic nature of what is currently taking place in the commercial property sector should not be underestimated.
“Structural changes already underway particularly around ecommerce will be exacerbated, hitting the high street hard.
“But alongside this, the inevitable rise in agile working as businesses seek to build resilience against future pandemics will undoubtedly lead to a reassessment of demand for office space.
“Against this backdrop, it is critical that the government engages with the industry to build a collaborative approach to addressing the challenges and help to facilitate the transformation of the commercial property estate to something that better reflects the needs of a twenty-first century economy and also the continuing shortfall of good quality housing across all tenures.”