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Signs of hope on lettings.

TENANT demand for commercial property in the North-east fell in the second quarter, although the pace of decline eased back markedly, according to the latest RICS Commercial Property Survey.

Net balances for new enquiries and confidence were the least negative since the start of the downturn in the third quarter of 2007, it said.

The moderate pace of decline in tenant demand points towards a mild improvement in the lettings market, particularly in the office sector where the net balance turned positive for the first time since the third quarter of 2007.

In total, 13% more chartered surveyors reported a fall than a rise in tenant demand, compared with 40% in the first quarter.

In the office sector, 1% more surveyors reported a rise than a fall in tenant demand - up from a negative reading of 37% in Q1 while the North-east's chartered surveyors reported a fall from -25% to -33%.

New enquiries to occupy business space were relatively flat although the net balances for office and industrial space turned positive for the first time since the downturn got underway.

The net balance of surveyors reporting a rise in available floor space rose at a lesser pace, having picked up at a record clip in the previous quarter.

Rising available space continued to be reported across all regions with the exception of the London industrial market. Nationally, 43% more chartered surveyors reported a rise in available floor space, down from 65% in Q1 while the region's chartered surveyors reported a significant drop from 25% to 100% in office space availability.

The ongoing contraction in the economy and the continuing rise in available floor space have weighed on surveyor expectations for the rental outlook.

Nationally, surveyors remain pessimistic with 53% of surveyors expecting a fall rather than rise in rents. However, the North-east bucked this trend with an increase from -75% of the region's chartered surveyors expecting a fall to -33% in Q2.

Commercial property sector spokesman for RICS North East, and partner in JK Property Consultants LLP, Kevan Carrick said: "The national picture is beginning to show some signs of improvement with the rate of decline slowing and the North-east mirrors this trend, particularly in sales, lettings and rental expectations for the months ahead, demonstrating an increase in confidence.

"It still remains a tenant/buyers market with significant deals being done - but as there is little new space being developed, as the existing space is being taken up we anticipate a shortfall in the future."
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Publication:Evening Gazette (Middlesbrough, England)
Date:Aug 11, 2009
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