Commercial demand falls fastest for a decade

The demand for commercial property fell at its fastest pace for a decade during the third quarter of 2008, according to the latest research from the RICS.

The RICS said that 52% more chartered surveyors reported a fall rather than a rise in demand for commercial property. This compares with a difference of 50% in the second quarter.

The industrial and office sectors were particularly badly hit, dropping to the lowest levels in the survey's history.

The worst-hit area continues to be the retail sector, with 59% more chartered surveyors reporting a fall rather than a rise in retail demand - although this is a slight improvement from the 63% difference recorded in the first quarter.

Oliver Gilmartin, senior economist at the RICS, said: “The ongoing drag from the credit crunch is permeating through rental sentiment across all regions and sectors, especially in the central London office market where recent worry over the health of the hedge fund industry is only adding to the sense of pessimism. The intensification in credit strains following the collapse of Lehman brothers will undoubtedly further dampen investment and occupier demand heading into the fourth quarter.”