Propertymark’s Q1 2024 Commercial Outlook paints a complex and varied picture of the sector's near-term trajectory.

NAEA Propertymark's commercial members were surveyed to gauge their perspectives on supply and demand trends within the sector over the coming year.

A notable 50% predicted an uptick in supply, while 31% anticipated a parallel increase in demand.

In the office sector specifically, 40% foresaw a rise in supply, contrasted sharply by 80% who believed demand would either stagnate or decline.

Turning to the takeaway sector, 27% of members expected both demand and supply to climb.

Conversely, the industrial sector saw 50% of members forecasting a demand surge, with 25% expecting supply to grow.

When examining capital values, positive sentiment prevails in the land, yards, and industrial sectors. However, the pubs and restaurants sector is viewed pessimistically, with sentiment having deteriorated further since the last quarter.

This positive outlook extends to rent levels in the industrial and land and yards sectors, whereas the office and takeaway sectors maintain a negative outlook on rents.

Furthermore, 58% of members reported rising rents following Q1 2024 rent reviews, while only 16% noted a decline post-review.

Nathan Emerson, CEO at Propertymark, remarked: “Member sentiment varies by sector, but there is notable positivity in the Land and Yards and Industrial sectors.

“Supply and demand imbalances remain, most notably in the pubs and restaurants sector, which continues to be impacted by changing trends.

“However, as the economy stabilises, we remain optimistic about the outlook for the UK commercial property sector.”

Michael Sears, a member of the commercial advisory panel, added: “Appetite for town centre retail is still predominantly from local business, but there have been some encouraging signs that brands have started to step up activity.

“Demand for larger open-plan offices remains poor, but there has been a resurgence in demand for smaller offices in business centres.

“With the Government’s proposals for high street rental auctions due to hit the market from September, the devil will be in the detail of how the mechanics of this might work.

“We need to avoid the unintended consequence of pushing price, rents and thus investment and regeneration of town centres down.”