Demand for commercial property in the UK is abating for the first time since 1998, a survey has claimed. The fall in growth is the result of the slowdown in the economy, with the appetite for industrial premises showing particular weakness.
According to the half-yearly survey by the Confederation of British Industry and property advisers GVA Grimley, demand growth will continue to wane over the next six months.
Stuart Morley, head of research at GVA Grimley, said: "Business confidence has weakened dramatically. The mood in property is not like the early 1990s, but it is certainly weaker than in November when there was a peak in optimism."
A positive balance of just 6 per cent of companies surveyed expected to increase their property holdings over the next six months, compared with 31 per cent in November. Demand will weaken for offices, factories and warehouses, with the only increase expected in retail premises.
A balance of 12 per cent of respondents said they had bought or rented more space since November, compared with 27 per cent for the previous six months. The CBI and GVA Grimley said this was the lowest figure since April 1997.
In manufacturing, a balance of 8 per cent of companies said they had reduced their property needs or, at best, trod water.
The significance of this troubled sector to the Midlands was underlined by the fact that demand for all types of commercial property had remained most static there.
Mr Morley, meanwhile, predicted a sharp fall in growth in office rents in central London, which he said would fall from 25 per cent a year six months ago to 8-10 per cent in a year's time.
West End rents had "levelled off", he said, at around £80 sterling per sq ft per annum, while the cost of office space in the City was still rising slightly at £60- £65 per sq ft.
