THE gloom surrounding the North-East commercial property marketfailed to lift in the second quarter this year, with landlords forced tocut rents to reel in new tenants.
The latest survey by the Royal Institution of Chartered Surveyorshighlighted a rise in the level of unoccupied commercial property in theregion, as fewer companies looked for office space.
Those that did move were able to capitalise on generous rentaldeals, with landlords increasing the number of incentive packages onoffer in the three months to June.
The number of new development start-ups continued to fall in theregion amid fears over the health of the economy. Surveyors werepessimistic about the future, with 18% more respondents predicting afall than a rise in rental values in the next three months. RICS said itshowed a “downbeat” picture across the regional market.
Simon Rubinsohn, RICS chief economist, said: “Broadly speaking, therising amount of unoccupied floor space in the North-east reflects thesituation across many parts of the country, illustrating the markedlydifferent economic conditions that separate the capital from the rest ofthe UK. Moreover, this starkly contrasting picture is expected topersist for some time.
“While the London property market will continue to enjoy thetrappings of recovery, in many other parts of the country it could feelas if the icy winds of recession are continuing to bite.”
His gloomy prognosis was shared by Teesside estate agent SandersonWeatherall, which said the market remained “stagnant” in challengingconditions.
David Jackson, at the Middlesbrough office of Sanderson, said: “Empty rates and a lack of finance are stifling any movement.”
Although the North-east commercial market is finding it tough going,the residential sector is faring better. An RICS survey showed a risein house sales and enquiries in June on the back of strong buyer demand,which triggered a rise in new stock.
Although fears over job security and limited mortgage availabilityslowed growth, RICS said the local market was proving more resilientthan other regions which had been hit by massive fluctuations inproperty values.