A new survey from the Royal Institution of Chartered Surveyors (RICS) has revealed a rise in the number of commercial properties that are being sold for conversion into residential housing. This trend is having a negative impact on the commercial sector, RICS has warned.
Over the second quarter of this year, an increasing number of commercial properties were being sold with Permitted Development Rights (PDR) which allows them to be transformed into residential living accommodation.
Almost half – 49 per cent – of respondents to the RICS survey reported that this activity was having a “moderate” impact on market activity within the commercial sphere. Meanwhile, 18 per cent reported that it was having a “substantial” impact on the sector.
The RICS report also found that the overall availability of commercial property fell at the fastest rate since the commercial market series of surveys began in 1998. Overall, 33 per cent more surveyors reported a shortage in the sector, with office and industrial spaces particularly affected.
The lack of supply to the commercial sphere was also said to be forcing interested investors towards lower grade investments and away from prime location investments in the heart of London.
Following on from last year’s survey, 33 per cent more surveyors also said that they predicted rent levels would rise over the course of 2014. Rents were anticipated to increase by 5.5 per cent in the industrial sector, 4.3 per cent in the offices sector and 2.8 per cent across retail space, the survey found.
RICS chief economist, Simon Rubinsohn, told the Examiner: “The latest results provide clear evidence that the economic recovery is broadening out across the country with rising employment increasing the demand for space in all sectors of the market. As a result, the balance of power is now shifting back to landlords.”