Owners Increase Incentives as Vacancies Rise in Office and Retail
RICS has released its Commercial Property Monitor for Q2 of 2019, with the industrial sector continuing to show market strength while office and retail markets continue to show a rise in vacancy rates. Meanwhile, overall occupier sentiment held from Q1, even showing marginal positives gains.
Tenant demand is increasing at a solid pace in the industrial and office sectors, while demand for retail continues to fall for the second consecutive quarter.Vacancies were cited as unchanged in the industrial segment during Q2 but continued to pickup in both the office and retail sectors. This has prompted office and retail landlords to increase incentive offerings to tenants, an ongoing trend for the past three years.
“What we’re seeing is an owner-occupier market that is highly varied by sector,” said Neil Shah, Managing Director, Americas, RICS. “However, we are increasingly seeing that real estate professionals believe that we are peaking in the property cycle. This could be troubling for the retail sector.”
According to RICS research, 49 percent of survey participants now view the market as having entered the peak phase of the property cycle. This is up from 41 percent in Q1 and is the highest share taking this view since RICS began tracking this indicator in 2015.
In line with this, investment enquiries rose, with a positive net balance of 22 percent of participants noting an increase. The industrial sector led with a net balance of 62 percent positive, followed by offices with a 31 percent positive net balance. However, enquires fell across the retail sector, with a net balance of negative 26 percent of participants noting a decline in Q2.
RICS U.S. and Global Commercial Property Monitors are a quarterly guide to the trends in the commercial property investment and occupier markets. The full U.S. and global Q2 reports are available from the RICS website at www.rics.org/economics, along with other surveys covering the housing market, residential lettings, commercial property, construction activity and the rural land market.
About RICS
RICS promotes and enforces the highest professional qualifications and standards in the valuation, development and management of land, real estate, construction, and infrastructure. The RICS name promises the consistent delivery of standards—bringing confidence to markets and effecting positive change in the built and natural environments. www.rics.org
