Overall demand from occupiers of commercial property is expected to rise over the next six months at a similar rate to the last, according to the survey of property trends published today
But rising demand for office space masks discouraging forecasts in other key property market sectorsand, for the first time in the survey's 11-year history, the retail sector expects to reduce its property holdings over the next six months.
The twice-yearly survey of occupiers was carried out by the CBI and property advisers GVA Grimley and covered offices, shops, factories and warehouses. It shows that in the past six months, 21% of respondents reported an increase in their property holdings whilst 9% decreased them. This balance of 12% is in line both with expectations and with the long-term average of plus 10%.
The biggest rise in demand over the last six months was for office property, where a balance of 7% reported an increase. Demand for retail property, on the other hand, was at its lowest in 7.5 years with a balance of -3% making it the weakest sector in this survey.
Looking forward, overall property demand in the next six months is expected to increase at a similar rate to the last six with 19% expecting to increase their property holdings and 7% expecting to decrease it - a balance of 11% which is again in line with the long-term average.
Offices are the only property sector expecting a higher level of demand for property during the next six months, with a balance of 9% foreseeing an increase. By contrast, retailers and manufacturers remain pessimistic about the future, each recording a balance of -2%.
Following an increase in business output over the past six months, the survey suggests that output growth is likely to slow over the next six. A balance 7% of respondents reported a rise in the number of people employed over the last six months and this looks set to continue over the coming half year.
Business optimism among respondents remains in the negative, however, reflecting broader uncertainty about prospects for the economy and downward revisions to the Government's economic growth forecasts. A negative balance was recorded for the third successive survey, this time of -13%.
Doug Godden, CBI head of economic analysis, applauded the overall increase in property demand but was concerned by differences across different sectors, which are masked by the overall survey result.
He said: "Demand for office property is holding up well and chimes with the continued expansion insectors such as financial and business services. But demand for manufacturing and retail property is much more subdued. The slowdown in retail sales growth is clearly impacting on property demand and for the first time this sector expects to cut back on floor space."