London’s retail property market has continued to struggle, despite a bounce in the wider commercial real estate sector driven by the General Election result.
Occupier demand in the retail sector fell in the fourth quarter of last year, according to research published today that found 70 per cent of chartered surveyors in the capital had seen a fall rather than a rise in demand.
However demand for space in the industrial sector has jumped and office space has remained steady.
Rental expectations for retail space in the capital remain low, as 64 per cent of respondents to a survey conducted by the Royal Institution of Chartered Surveyors said they were anticipating a fall in prices.
Meanwhile, 65 per cent of respondents said there had been an increase in inducements on offer to tempt prospective retail tenants – the highest recording since 2009.
Research showed that 55 per cent of participants in the survey reported a drop in retail investment enquiries.
However, overseas investment enquiries in central London offices and industrial space rose to the highest reading since December 2017.
Rics economist Tarrant Parsons said: “Expectations appear to have strengthened in the office and industrial sectors following the decisive outcome of the General Election, with markets in prime locations in particular seeing projections for capital value and rental growth revised higher.
“That said, this improved sentiment has not found its way into the retail sector, where the outlook remains just as downbeat as before.
“Given the continued rise in retail vacancies and sharply falling demand, any change in fortunes across the sector still seems to be some way off. In the meantime, further downward adjustments in rents and capital valures expected both in the year to come and further ahead.”