RICS Economics

Second quarter 2008

RICS commercial market survey Second quarter 2008 1

RICS commercial market survey

Market downturn intensifies as economy slows

Occupier and investment market both deteriorate further Declines are broad based although retail sector weakest The South and South East generally the best performing regions in England and Wales; the North generally the worst, followed by London

Change in sales and lettings of commercial property to occupiers, England and Wales % Balance
30 20

10 0 -10 -20 -30 -40

Tenant demand for commercial property declined at the fastest pace in the surveys history (since 1998) in the second quarter, as did enquiries to occupy commercial premises. Demand and enquiries were weakest in the retail sector and fell back to a lesser degree in the industrial and office markets, as the economic slowdown reduced business expansion. Surveyors continued to report a rise in the amount of available floor space in Q2 across all sectors, although growth in availability did not accelerate any further, having hit a ten year high in Q1. This figure masks variations between the sub-sectors however; relatively strong increases in availability took place in the retail sector while the increase was rather more modest in the industrial and office markets growth in Office availability is still only half that reported following the dotcom bust. Confidence in the outlook for occupier demand and rents reached the lowest levels respectively in the surveys history. In both cases, confidence was most depressed in the retail market although fell back to record survey lows in both the industrial and office sectors.

-50 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Rental expectations experienced the sharpest turnaround in the office sector with expectations for London offices the weakest across England. However, office markets countrywide have witnessed a sharp reassessment in the rental outlook as the economic slowdown has broadened to areas of the economy outside the financial sector. The value of inducements increased at the fastest pace in the surveys history (1998), with the largest increases taking pace in the office sector. Rising inducements was also recorded at a faster pace in the in the industrial and retail sectors as tenants bargaining power has picked up. Meanwhile, lease lengths declined at the fastest pace in the surveys history (1998), with the largest declines taking place in the retail sector, and the smallest declines taking place in the industrial sector. Both investment demand and capital values declined at the fastest pace since the credit crunch got underway. This pattern was evident across all three sub-sectors of the market at a similar pace.

% balance* 2006 Q1 Q2 Q3 Q4 2007 Q1 Q2 Q3 Q4 2008 Q1 Q2

All commercial property : England and Wales Change during the quarter Expected next quarter New sales/ Available Occupier New sales/ Rental lettings to space for enquiries lettings to levels occupiers occupiers for space occupiers 1 7 8 7 16 12 -1 -14 -31 -50 2 2 0 0 1 1 2 7 27 26 4 3 4 6 1 9 2 -18 -36 -54 8 10 15 14 19 14 -8 -19 -29 -60 13 16 19 20 19 23 11 -4 -24 -42

*Balance = Proportion of surveyors reporting a rise minus those reporting a fall For the second quarter survey, 219 responses were received for the office sector, 186 for the retail sector and 195 for the industrial sector. All figures are "Seasonally Adjusted" in the table

RICS commercial market survey Second quarter 2008

Commercial property - all sectors Demand

Occupier demand for office space declined at the fastest pace at the surveys history (1998). This is also true at the regional level in England and Wales. However, the one region of relative strength was the South, where occupier demand did not fall as fast as the national average (although it still deteriorated at the worst pace in the surveys history). Change in sales & lettings of commercial space to
occupiers over the past quarter % Balance, seasonally adjusted
30 20 10 0 -10 -20 -30 -40 -50 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Confidence
Confidence in the outlook for occupier demand reached the lowest level in the surveys history (1994). This is also true at the regional level in England and Wales. Again, however, the one area of the country that relatively outperformed was the South, where confidence did not fall as low as the national average (although it still deteriorated to the lowest level in the surveys history). Surveyor confidence in occupier sales & lettings for the next quarter
% Balance, seasonally adjusted
40

20

-20

-40

-60 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

New occupier enquiries

Enquiries to occupy space declined at the fastest pace in the surveys history. This is also true at the regional level in England and Wales. As with confidence and demand, the one area of the country that relatively outperformed was the South. Here, enquiries did not fall as fast as the national average (although it still deteriorated at the worst pace since Q4 2002).
Change in occupier enquiries for commercial space over the past quarter % Balance, seasonally adjusted
40

20

-20

-40

-60 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

RICS commercial market survey Second quarter 2008 3

Floorspace availability
The amount of available floor space for occupation increased at pretty much the same firm pace as in the previous quarter. This is also true at the regional level in England and Wales. Again, the South relatively outperformed the rest of the country, while the worst performing region was the North.
Change in available commercial space for occupation over the past quarter % Balance, seasonally adjusted
40

20

-20

-40 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Expected rents
Confidence in the outlook for rents reached the lowest level in the surveys history. This is also true at the regional level in England and Wales, apart from London. The Midlands and Wales outperformed the rest of the country, where rental expectations did not fall as low as the national average.
Surveyor expectations for the change in rents for the next quarter % Balance, seasonally adjusted
50

30

10

-10

-30

-50 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Lease lengths / Inducements

The value of inducements increased at the fastest pace in the surveys history (1998). This is also true at the regional level in England and Wales. Again, the South relatively outperformed the rest of the country, with inducements rising at the lowest pace compared to other regions. Lease lengths declined at the fastest pace since Q3 2003. This was more or less the case in London and the South. In the North, lease lengths declined at the fastest pace in the surveys history, while in the Midland and Wales, they declined at the fastest since Q4 2002.
Change in lease lengths over the past year / Inducements over the past quarter % Balance, seasonally adjusted
70

50

30

10

-10

-30 2000 2003 2006

Inducements

Lease lengths

RICS commercial market survey Second quarter 2008

Office property market Offices - Overview

Occupier demand for office space declined at the fastest pace at the surveys history (1998). Ongoing disruption in global credit markets combined with growing uncertainty towards the outlook for economic growth continues to instill greater caution amongst occupiers of office space. The Central London office market has witnessed a sharp deterioration in occupier market fundamentals since the summer, with demand, confidence and enquiries all now very weak. For the time being however, they remain in better shape than the worst parts of the post-internet bubble shake out. In addition the slight tick upward in supply in Q1 accelerated in Q2, with growth at the fastest since 2003 Q2. Business surveys during the second quarter, point to a services sector that has either stalled or already contracting. With unemployment rising and forward indicators from business surveys and vacancy rates deteriorating, it seems likely that occupier demand is set to remain weak across the country Indeed, confidence in the outlook for occupier demand reached the lowest level in the surveys history (1994) and enquiries to occupy office space declined at the fastest pace since Q4 2002. This depressed the outlook for rents to the lowest level since Q4 2002.

OfficesDemand
Occupier demand for office space declined at the fastest pace at the surveys history (1998). This is also true at the regional level in England and Wales. However, the one region of relative strength was the South, where occupier demand did not fall as fast as the national average (although it still deteriorated at the worst pace in the surveys history).
Change in sales & lettings of space to occupiers % Balance
40 20

-20

-40

-60

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Change in sales & lettings of space to occupiers %balance

08Q1 08Q2

Cen Lon G. Lon

-1 6 -54 0 -69

Eastern
-40 -55

EM
-50 -59

WM
-44 -62

NE
0 0

NW
-39 -56

NI

Scot
1 3 -20

SE
0 -1 9

SW
-25 -46

W
-50 -40

YH
-23 -67

OfficesSurveyor confidence
Confidence in the outlook for occupier demand reached the lowest level in the surveys history (1994). This is also true at the regional level in England and Wales. Again, however, the one area of the country that relatively outperformed was the South, where confidence did not fall as low as the national average (although it still deteriorated to the lowest level in the surveys history).
Confidence in occupier activity % Balance
40 20 0 -20 -40 -60 -80

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Confidence in sales & lettings of space to occupiers for the next quarter ahead %balance Cen Lon G. Lon Eastern EM WM NE NW 08Q1 08Q2 -40
-69

NI

Scot 25
0

SE -1 3
-53

SW -39
-54

W -50
-60

YH 0
-61

1 4
-69

-1 3
-41

-50
-67

-47
-77

0
-86

-22
-50

RICS commercial market survey Second quarter 2008 5

OfficesOccupier enquiries
Enquiries to occupy office space declined at the fastest pace since Q4 2002. This is also true at the regional level in England and Wales. As with confidence and demand, the one area of the country that relatively outperformed was the South. Here, enquiries did not fall as fast as the national average (although it still deteriorated at the worst pace since Q4 2002).
Change in occupier enquiries for space % Balance
60 40 20 0 -20 -40 -60

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Change in occupier enquiries for space %balance Cen Lon G. Lon Eastern
08Q1 08Q2 -44 -69 -8 -31 -47 -45

EM
-56 -59

WM
-56 -46

NE
0 -100

NW
-11 -67

NI

Scot
-17 -20

SE
-13 -25

SW
-39 -31

W
-25 -100

YH
0 -83

OfficesRent expectations
Confidence in the outlook for rents reached the lowest level since Q4 2002. However, this result appears to be skewed by the performance of London; everywhere else, confidence in the rental outlook reached the lowest level in the surveys history (1998). The South again outperformed the rest of the country, where rental expectations did not fall as low as the national average.
Expected change in rents for the next quarter % Balance
60 40 20 0 -20 -40 -60

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Expected change in rental levels, next quarter %balance Cen Lon G. Lon Eastern
08Q1 08Q2 -1 6 -62 -8 -54 -21 -45

EM
-25 -26

WM
-35 -54

NE
0 -43

NW
-1 1 -33

NI

Scot
50 40

SE
-10 -8

SW
-14 -62

W
0 -100

YH
0 -39

OfficesAvailable floorspace
The amount of available floor space for occupation increased at the same firm pace as in the previous quarter. This is also true at the regional level in England and Wales. Again, the South relatively outperformed the rest of the country, while the worst performing region was the North.
Change in available space for occupation % Balance
60 40 20 0 -20 -40 -60

2000

2001

2002

2003

2004

2005

2006

2007

2008

Change in available space for occupation %balance Cen Lon

08Q1 08Q2 4 50

G. Lon
8 0

Eastern
13 9

EM
19 30

WM
47 46

NE
-33 43

NW
44 50

NI

Scot
-38 -20

SE
20 -3

SW
26 35

W
50 100

YH
85 44

RICS commercial market survey Second quarter 2008

OfficesLease lengths / Inducements

The value of inducements increased at the fastest pace in the surveys history (1998). This is also true at the regional level in England and Wales. In the South, inducements increased at the slowest pace. Lease lengths declined at the fastest pace since Q3 2003. This was more or less the case in London and the South. In the North, lease lengths declined at the fastest pace in the surveys history, while in the Midland and Wales, they declined at the fastest since Q4 2002.
Change in inducments o ver the past quarter % balance Central Lo ndo n Greater London Eastern East M idlands West M idlands No rth East No rth West 08Q1 44 8 33 38 50 0 44 08Q2 85 54 50 65 46 100 67 Change in lease lengths o ver the past year 08Q1 4 8 -20 -1 3 -41 0 -11 08Q2 -38 -1 5 -1 8 -26 -43 -86 -39

Change in lease lengths and inducements % Balance

80 60 40 20 0 -20 -40 -60

No rthern Ireland Sco tland So uth East So uth West Wales Y&H -29 10 33 50 38 0 40 52 60 44 0 -1 3 -29 0 -1 5 0 -3 -50 -60 -44

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Inducements

Lease lengths

Offices - New development

New office development starts declined at the fastest pace since Q1 2003 and this pattern was more or less evident in London and the South East. In the Midlands, Wales and the North development starts declined at the fastest pace in the surveys history. New office development completions also declined at the fastest pace since Q1 2003. Again the heaviest declined took place in the Midlands, Wales and the North. Less sharp declines in completions took place in London and the South.
Change in new develo pment o ver the past year Starts % balance Central Lo ndo n Greater Lo ndo n Eastern East M idlands West M idlands No rth East No rth West No rthern Ireland 07Q4 -1 7 -23 -38 -33 -8 38 -6 08Q1 -29 9 -43 -8 -25 0 -1 1 Co mpletio ns 07Q4 -21 -8 -45 -7 1 7 25 6 08Q1 -1 3 27 0 8 0 25 -6

Change in new development starts and completions % Balance

50

Sco tland So uth East So uth West

40 -6 -25 33 -25

50 -4 7 25 -50

20 -1 3 -4 0 1 7

0 4 4 0 -8

30

10

Wales Y&H

-10

-30

-50

2003

2004

2005

2006

2007

2008

Change in new office starts over the past year

Change in new office completions over the past year

RICS commercial market survey Second quarter 2008 7

Retail property market Retail - Overview

Occupier demand for retail space declined at the fastest pace in the surveys history (1998). This pattern was more or less evenly distributed throughout England and Wales, with the exception of London, where demand was not as weak as it was in Q4 2001 (although it was still very weak). Demand for retail space was weakest in the North; in London, the South and Midland and Wales, demand fell at around the same sharp pace (as each other). The second quarter saw a conflict between the surveys of retail conditions which appeared to show real weakness in the UK high and the official retail sales numbers which showed remarkable resilience. With inflation very high and the labour market weakening the outlook for retail property does seem to be darkening and it is only a mater of time before the official numbers star to slow. Confidence in the outlook for retail demand reached the lowest level in the surveys history (1994) driven by occupier enquiries which declined at the fastest pace in the surveys history. Respondents had a gloomy outlook for rents which reached the lowest level in the surveys history.

RetailDemand
Occupier demand for retail space declined at the fastest pace in the surveys history (1998). This is also true at the regional level in England and Wales., with the exception of London, where demand was not as weak as it was in Q4 2001 (although it was still very weak). Demand for retail space fell fastest in the North; in London, the South and Midland and Wales, demand fell at around the same sharp pace (as each other).
Change in sales & lettings of space to occupiers % Balance
40 20 0 -20 -40 -60 -80

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Change in sales & lettings of space to occupiers %balance

08Q1 08Q2

Cen Lon
-43 -46

G. Lon
0 -63

Eastern
-40 -44

EM
-47 -44

WM
-50 -80

NE
0 -1 00

NW
-71 -89

NI

Scot
0 -60

SE
-52 -48

SW
-50 -68

W
-50 -80

YH
-8 -72

Retail Confidence
Confidence in the outlook for retail demand reached the lowest level in the surveys history (1994). This is also true at the regional level in England and Wales. Confidence turned the most negative in the North and highest in the South, but the latter was still highly depressed.
Confidence in occupier activity % Balance
20 0

-20

-40

-60

-80

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Confidence in sales & lettings of space to occupiers for the next quarter ahead %balance Cen Lon G. Lon Eastern EM WM NE NW 08Q1 08Q2 -47
-64

NI

Scot -1 7
-20

SE -30
-54

SW -59
-79

W -75
-1 00

YH 8
-78

-50
-88

-20
-39

-33
-77

-41
-90

0
-1 00

-47
-78

RICS commercial market survey Second quarter 2008

Retail - Occupier enquiries

Occupier enquiries for retail space declined at the fastest pace in the surveys history (1994). This is also true at the regional level in England and Wales, with the exception of London, where they declined at the fastest pace since Q1 2003. Enquires declined at the fastest pace in the North, and at the slowest pace in London.
Change in occupier enquiries for space % Balance
40 20 0 -20 -40 -60 -80

2000

2001

2002

2003

2004

2005

2006

2007

2008

Change in occupier enquiries for space %balance Cen Lon G. lon Eastern
08Q1 08Q2 -21 -50 -22 -63 -36 -47

EM
-40 -52

WM
-56 -90

NE
0 -100

NW
-56 -72

NI

Scot
0 -20

SE
-43 -70

SW
-62 -75

W
-25 -80

YH
25 -89

RetailRent expectations
Confidence in the outlook for rents reached the lowest level in the surveys history. This is also true at the regional level in England and Wales. Rental expectations were lowest in the South and least depressed in the Midlands and Wales.
Expected change in rents % Balance
50 30

10

-10

-30

-50

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Expected change in rental levels, next quarter %balance Cen Lon G. Lon Eastern EM -29 -11 -18 -20 08Q1 -50 -45 -32 -31 08Q2

WM
-13 -80

NE
0 -50

NW
-67 0

NI

Scot
0 0

SE
-39 -47

SW
-28 -71

W
0 -80

YH
-17 -39

Retail Available floorspace

The amount of available floor space for occupation increased at the fastest pace in the surveys history (1999). This appears to be skewed, however, by particularly sharp increases in the Midlands, Wales and the North. In the South, availability continued to increase strongly, but at a slightly lower pace, while in the London, availability maintained its moderate pace of increase.
Change in available space for occupation % Balance
40

20

-20

-40

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Change in available space for occupation %balance Cen Lon G. Lon Eastern 08Q1 08Q2 1 5
25

EM 27
36

WM 44
70

NE 0
50

NW 47
89

NI

Scot 1 7
40

SE 43
8

SW 61
70

W 25
80

YH 67
44

22
0

45
24

RICS commercial market survey Second quarter 2008 9

RetailLease lengths / Inducements

The value of inducements increased at the fastest pace in the surveys history (1998). This is also true at the regional level in England and Wales, with the exception of London (where growth in the value of inducements slowed). The value of inducements increased at the fastest pace in the North. Meanwhile, lease lengths declined at the fastest pace in the surveys history. Lease lengths declined particularly sharply in the North, while in London, they declined at the same low pace as in the previous three quarters.
Change in inducments o ver the past quarter % balance Central Lo ndo n Greater Lo ndo n Eastern East M idlands West M idlands No rth East No rth West 08Q1 38 1 1 1 8 33 38 0 59 08Q2 27 0 40 58 60 1 00 82 Change in lease lengths o ver the past year 08Q1 -7 -1 1 -9 -1 3 -40 0 -6 08Q2 -9 -9 -5 -1 6 -50 -1 00 -61

Change in lease lengths and inducements % Balance

60 40 20 0 -20 -40

No rthern Ireland Sco tland So uth East So uth West Wales Y&H 20 39 48 50 25 50 40 67 60 44 0 -1 3 -34 0 -25 0 -1 0 -56 -60 -50

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Inducements

Lease lengths

Retail - New development

New office development starts declined at the fastest pace in the surveys history (1998). This is also true at the regional level in England and Wales, with the exception of London, where they declined at the fastest pace since Q2 2005. New developments starts declined at the fastest pace in the Midlands and Wales. New office development completions also declined at the fastest pace in the surveys history (1998). Again, this pattern was more or less evenly distributed throughout England and Wales, with the exception of London, where they declined at the fastest pace since Q2 2005. New developments completions declined at the fastest pace in the Midlands and Wales.
Change in new develo pment o ver the past year Starts % balance Central Lo ndo n Greater Lo ndo n Eastern East M idlands West M idlands No rth East No rth West No rthern Ireland 08Q1 -8 0 -50 -9 -36 0 -29 08Q2 -27 -60 -75 -48 -56 0 -71 Co mpletio ns 08Q1 8 0 0 -22 -29 0 -1 2 08Q2 -9 -40 -60 -45 -43 -50 -31

Change in new development starts and completions % Balance

10

Sco tland So uth East So uth West Wales

0 -28 -32 25 -45

0 -50 -32 -40 -56

0 0 -22 0 -36

0 -36 -27 -20 -38

-10

Y&H
-30

-50

2003

2004

2005

2006

2007

2008

New Retail completions over the past year

New Retail starts over the past year

10

RICS commercial market survey Second quarter 2008

Industrial property market Industrial Overview

Occupiers demand for industrial property declined at its fastest pace in the surveys history, and has now fallen for three consecutive quarters. Falls in occupier demand took place across all regions in the survey with the exception of Scotland. The sharpest declines took place in the North East and the East. Key surveys have highlighted a slowdown in the manufacturing sector during Q2 which left the industry on the verge or contraction. Indeed, surveys suggest that new orders have been falling for most of 2008 and employment has also started to shrink. Indeed, according to workforce jobs data, manufacturing employment peaked in 2007 Q3. Surveyor confidence in the activity outlook deteriorated further into negative territory, reaching the lowest level in the surveys history, as enquiries to occupy industrial space fell for the third consecutive quarter and at the fastest pace ever. The combination has pushed surveyor confidence in the rental outlook further into negative territory, reaching the lowest level in the surveys history.

Industrial Demand
Occupiers demand for industrial property declined at its fastest pace in the surveys history, and has now fallen for three consecutive quarters. Falls in occupier demand took place across all regions in the survey with the exception of Scotland. The sharpest declines took place in the North East and the East.
Change in sales & lettings of space to occupiers % Balance
40 20

-20

-40

-60

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Change in sales & lettings of space to occupiers %balance

08Q1 08Q2

All Lon
-1 0 -53

Eastern
-24 -59

EM
-50 -42

WM
-37 -42

NE
22 -86

NW
-29 -33

NI

Scot
33 0

SE
-1 6 -34

SW
-1 1 -35

W
-20 -40

YH
-8 -33

Industrial Surveyor confidence

Surveyor confidence in the activity outlook deteriorated further into negative territory, reaching the lowest level in the surveys history. Sentiment deteriorated in every region, with only Scotland not seeing a majority of respondents with negative confidence.
Confidence in occupier activity % Balance
40 20

-20

-40

-60

1999 2000 2001 2002 2003 2004 2005

2006 2007 2008

Confidence in sales & lettings of space to occupiers for the next quarter ahead %balance 08Q1 08Q2 G. Lon Eastern 0 6
-60 -59

EM -31
-71

WM -35
-75

NE 22
-86

NW 0
-33

NI

Scot 50
0

SE -22
-57

SW -37
-54

W -20
-60

YH 1 5
-44

RICS commercial market survey Second quarter 2008 11

IndustrialOccupier enquiries
Enquiries to occupy industrial space fell for the third consecutive quarter and at the fastest pace ever. Declines in enquiries too place across all regions in the survey with the exception of Scotland, where they remained stable. The sharpest falls in enquiries took place in the Wales and the North East, while the least heavy declined took place in the South West.
Change in occupier enquiries for space % Balance
40

20

-20

-40

-60

2000

2001

2002

2003

2004

2005

2006

2007

2008

Change in occupier enquiries for space %balance All Lon

08Q1 08Q2 -25 -44

Eastern
-1 2 -55

EM
-44 -54

WM
-37 -42

NE
1 1 -86

NW
-1 8 -50

NI

Scot
0 0

SE
-1 9 -40

SW
-8 -35

W
-20 -80

YH
31 -67

IndustrialRent expectations
Surveyor confidence in the rental outlook deteriorated further into negative territory, reaching the lowest level in the surveys history (Q3 1998). Rental expectations deteriorated further across every region in the survey. However, Scottish respondents are still expecting modest rental increases. The sharpest declines are expected in Wales and the South West. Expected change in rents
% Balance
40

20

-20

-40

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Expected change in rental levels, next quarter %balance All Lon Eastern EM WM
08Q1 08Q2 -1 0 -44 -24 -27 -25 -21 -44 -42

NE
-1 7 -43

NW
-41 -44

NI

Scot
33 20

SE
-3 -1 5

SW
-7 -62

W
-20 -1 00

YH
0 -28

IndustrialAvailable floorspace
The amount of available floor space for occupation increased for the twelfth consecutive quarter although the pace of increase slowed slightly for Q1s record pace. Sharp increases in available floor space took place in Wales and the North West. Less sharp increases took place in every other region expect Scotland and the North Eats where floor space was stable.
Change in available space for occupation % Balance
40

20

-20

-40

2000

2001

2002

2003

2004

2005

2006

2007

2008

Change in available space for occupation %balance 08Q1 08Q2 All Lon -20
1 1

Eastern 6
1 8

EM 1 3
22

WM 50
33

NE -1 4
0

NW 24
39

NI

Scot -50
0

SE 1 0
-6

SW 8
23

W 40
80

YH 54
1 7

12

RICS commercial market survey Second quarter 2008

IndustrialsLease lengths / Inducements

The value of inducements offered to tenants increased at their fastest pace in the surveys history. Increases took place across all regions in the survey, with the exception of Greater London. The sharpest increases in inducements took place in the North West and North East. The length of leases fell at the fastest pace in the surveys history, with the sharpest falls taking place in the North East and Wales. The length of leases remained stable in Scotland, Northern Ireland and were close to stable in the South East.
Change in inducments o ver the past quarter % balance Londo n Eastern East M idlands West M idlands No rth East No rth West 08Q1 0 29 31 47 50 1 8 08Q2 -1 7 45 39 42 1 00 61 Change in lease lengths o ver the past year 08Q1 10 -6 -25 -28 0 -12 08Q2 1 7 -23 -21 -1 8 -86 -33

Change in lease lengths and inducements % Balance

60

No rthern Ireland Sco tland So uth East So uth West Wales Y&H -20 6 31 20 31 25 39 40 40 33 0 -13 -27 -20 -15 0 -3 -50 -60 -44

40

20

-20

-40

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Inducements

Lease lengths

Industrials - New development

New development starts declined at a regional level for the fourth consecutive quarter and at the fastest pace in the surveys history. The sharpest falls in new development starts took place in North East, the Eastern region and the West Midlands, while they remained stable in Scotland. New development completions declined at a regional level for the third consecutive quarter and at the fastest pace in the surveys history. Most regions in the survey experienced falling completions with the exception of the North East and the North West where they were unchanged and in Scotland where completions rose.
Change in new develo pment o ver the past year Starts % balance Lo ndo n Eastern East M idlands West M idlands No rth East No rth West 07Q4 -23 -69 -20 -8 38 0 08Q1 -6 -44 -8 -35 -1 1 -24 Co mpletio ns 07Q4 -23 -53 -20 29 25 1 9 08Q1 -7 0 -1 7 -1 8 1 3 -1 2

Change in new development starts and completions % Balance

20

No rthern Ireland Sco tland So uth East 40 -1 5 38 33 -50 0 0 -1 1 -25 -50 67 -1 9 5 0 0 0 0 0 -50 -8

So uth West Wales Y&H

-20

-40

-60

-80

2003

2004

2005

2006

2007

2008

New Industrial completions over the past year

New Industrial starts over the past year

RICS commercial market survey Second quarter 2008 13

Chartered surveyor market comments

EAST MIDLANDS NORTHAMPTON Brendan Bruder BSc MRICS Abbey Ross "Prime retail rents have edged toward 145 although there is concern locally about the growing number of vacant retail premises in the towns core area. Business Park offices appear to have peaked at rentals of 17-17.50 psf although inducements and incentives are required for lettings of new space at that level. Progress is being made at Pineham (Prologis - junction 15a of the M1) although all commercial markets in Northampton are seeing significant reductions in levels of enquiries though deals are being done in Northampton." NORTHAMPTON Ben Coleman BSc FRICS Ben Coleman Associates "Enquiries are down by 30% on the same period last year. The good news is that tenants/buyers are still doing deals, albeit on revised terms. Freehold office values are down by 10%. Prime rents holding up but incentives have increased. Secondary space is very difficult to shift." NOTTINGHAM N G Corder BSc FRICS Corder Commercial "The Nottingham market has entered an unusually quiet phase in advance of the holiday season. A "wait and see" philosophy prevails." NOTTINGHAM Matthew Hannah BSc MRICS Innes England "The occupier markets are holding up and their are areas of the retail and roadside markets, especially the food sector, which are generating strong demand. Private individuals have been the focus for our investment product and with higher levels of equity, the funding and transactions have completed." NORTHAMPTON Ian Leather Lambert Smith Hampton "The market will be challenged by the wider downturn in the UK economy. However, the supply of quality office space in and around Northampton is limited and vacancy rates and supply levels are still relatively low. Occupiers may reap the benefits of increased incentives on leasehold deals but capital values for owner occupiers are holding up." GRANTHAM Tim Murgatroyd MSc FRICS Humberts "Whilst activity levels remain good at present, there are signs that overall demand from occupiers together with new build starts are dropping, looking to a quieter market in coming months." DAVENTRY Charles Smedley Lambert Smith Hampton "Whilst the general level of enquiries and transactions are down, lettings and a limited number of sales are still completing. New town centre retail scheme by Ashford and industrial development on Drayton Fields still provides encouragement for the future." NORTHAMPTON Stephen Smith BSc FRICS King West Blacklee Smith "Activity in all sectors continues to be cautious and frustrated by a lack of lending facilities from the major banks and funding institutions." NORTHAMPTON David Smith BSc FRICS Bidwells Drake "The restricted availability of debt initially impacted on property by making transactions more difficult. It is now impacting on property with a reduction of demand due to a reduction of economic confidence and activity generally." DAVENTRY David Smith BSc FRICS Bidwells Drake "Applicant enquiries are down compared to this period last year however, those looking are serious. Freehold demand down; there are more enquiries for leasehold." SPALDING John Smith FRICS FAAV R Longstaff & Co "Activity levels generally lower" EASTERN CAMBRIDGE Robert Alston BSc MRICS Robert Alston Chartered Surveyors "All very quiet at the moment - July and August will be slow. Good time to go on holiday!" PETERBOROUGH Anthony Barker BSc FRICS Barker Storey Matthews "Over the last 3 months market conditions have deteriorated rapidly with confidence at low levels.In addition to difficult economic conditions the imposition of empty rates on industrial property is now causing downward pressure on rents as landlords offer concessionary terms to mitigate their rates liability." HARLOW Simon Beeton MRICS Derrick Wade Waters "The market remains very subdued but there is activity and deals can be done if landlords or vendors are realistic in their expectations. Occupiers are seeking flexibility and agents are having to balance the parties expectations to arrive at an agreement which extends the negotiating period. As ever the right product in the right place will tend to find occupiers first." SOUTHEND ON SEA Terence Hair BSc MRICS Hair & Son "The owner occupier demand for freehold commercial property has fallen away. The demand for small and secondary property to let remains relatively unaffected." LETCHWORTH Stuart T King MRICS Davies King "The market has slowed down and activity and confidence is low." SOUTH HERTFORDSHIRE David Linnell MA FRICS David Linnell Chartered Surveyors Property Adviser "There has been a significant decline in occupier enquiries for all property types. The town centre redevelopment at Hatfield has been put on hold." BURY ST EDMUNDS Jonathan Lloyd MRICS George Hazell & Co. "Demand still appears good in niche areas - good/prime retail in Bury St Edmunds or unusual properties which appeal to owner occupiers. Rental demand across all sectors is generally steady." HUNTINGDON Alan Matthews BSc FRICS Barker Storey Matthews "Since the end of March we have noticed a marked downturn in occupier activity across all sectors. At the smaller end leasehold demand is slightly better but only because of diminished demand for freehold due to financing difficulties. There is little doubt that the next 12-18 months will be extremely difficult with lower levels of activity than has been seen over the last 12 years. The introduction of empty rates coupled with the downturn in demand is providing some very good opportunities for tenants." STEVENAGE Mike Phoenix BSc MRICS Brown & Lee "We have seen a considerable increase in the amount of space available over the past 6 months, which means we have moved from a situation where supply and demand was fairly equal to a situation where supply is beginning to outstrip demand." CAMBRIDGE Philip Woolner MA MRICS Cheffins "Occupiers of both freehold and leasehold properties continuing to take a cautious approach resulting in low activity levels in terms of demand and take up. No evidence of overall fall in rental levels but incentives offered by landlords (e.g. rent free periods) have increased. Investment activity very slow, but expectation 'gap' between vendors and purchasers is narrowing, which could result in renewed activity in Q3/Q2 2008." GREATER LONDON - C CITY - C Paul Bennett BSc (Hons) MRICS Nelson Bakewell Ltd "The summer lull has come early as occupier confidence has been eroded by the general negative outlook in the economy. Saying that, there are still requirements in the market, you just have to work harder to secure them to your building." VICTORIA - C Guy Bowring BSc(Hons) MRICS Tuckerman "Despite a worsening economic climate, demand for decent stock still outweighs supply. As long as this remains the case, we do not foresee much change is rental levels, although there is some evidence that tenant incentives may be increasing." WEST-END - C Christopher Burrows BSc FRICS DTZ Debenham Tie Leung "Despite demand slipping, supply increasing and sentiment changing there is still significant letting activity in the West End office market." WEST-END - C Christopher Pryke MRICS George Trevor & Associates "I anticipate the supply of second hand stock will increase in the next few months. Demand is still strong but we will see a rise in inducements before headline rents reduce." DOCKLANDS - C Nick Sullivan BA MRICS Dobbin & Sullivan "Demand across all sectors down, but leasehold occupiers still fairly active." GREATER LONDON - O ENFIELD - O Clifford Bonnett BSc MRICS Sbh Page & Read "The liquidity crisis within the banking sector is preventing owner occupiers from purchasing buildings and thereby hindering their expansion." VAUXHALL - O Guy Bowring BSc(Hons) MRICS Tuckerman "Despite a worsening economic climate, demand for decent stock still outweighs supply. For as long as this remains the case, we do not envisage much change in rental levels. There is evidence however, that tenant inducements are increasingly slightly." SOUTH LONDON - O Kevin Burke FRICS Frederick Holt & Company "The demand for leasing offices and industrial/warehouse units is still reasonably good. Owner occupiers are still in the market to buy but some are waiting to assess market conditions before committing."

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RICS commercial market survey Second quarter 2008

WALTHAMSTOW - O Neal Matthews BSc MRICS Strettons "The amendment to rates liability has had an impact on the industrial property market with landlords now seeking to let premises at lower rents than previously to avoid the 6 month business rates liability." BROMLEY - O Roger Miller FRICS Michael Rogers "Freehold demand is now very weak although lettings remain surprisingly strong." NORTH EAST TEESSIDE D P Johnson BSc MRICS Gerald Eve "Shopping Centre LL's are turning towards turnover only based deals to ensure occupancy for 3 reasons - to mitigate rates liability on empty units - to ensure occupancy of voids and therefore vibrancy of tenant mix - to protect established Zone A evidence rather than let at discounted Zone A rates. There still seems to be Companies/individuals in the market to acquire on an opportunistic basis but sellers have yet to accept falling values and the market is rather stagnant as a result." NORTH WEST CARLISLE Simon Adams FRICS Peill & Company "Whilst there is still a reasonable level of enquiries, there is a discernable nervousness in the market generally, particularly retail. The imposition of empty rates is starting to have an adverse effect, as anticipated, in terms of pressure on landlords to reduce asking terms, or incentivise lettings, which is likely to have a knock-on adverse effect on rental and capital values." BURNLEY Brent Forbes BSc MRICS H W Petty & Co "Investors looking for prime, secondary market very limited. Industrial enquiries lower but still some activity there. Retail very limited demand for secondary. Prime - looking for greater incentives." MANCHESTER Andrew Gardiner BSc MRICS DTZ Debenham Tie Leung "Developers very nervous and cautious. Occupiers still around but decisions take far longer." SOUTHPORT Antony Hill FRICS Antony Hill Partnership "The market has noticeably slowed down. Empty rates burden is having an effect on the market. Investors are holding back looking for bargains. Landlords are accepting lower rents to keep properties occupied. Difficult times are ahead!"

OLDHAM Paul Nolan MA (Cantab) FRICS Nolan Redshaw "The market is static and beginning to fall back, with a lack of finance and an increase in developers overheads from Government policy on vacant rates." BURY Paul Nolan MA (Cantab) FRICS Nolan Redshaw "Despite a slowdown in the whole market, product of a reasonable quality but in the right location carries on regardless. For example, we have just achieved a record office sale price and record letting on Waterfold Business Park because its the premier Bury location and has significant levels of demand." BOLTON Mike Redshaw MA (Cantab) FRICS Nolan Redshaw "The market has slowed quickly with fewer enquiries coming through and a hesitancy from both occupiers and investors. Despite the general slowdown good product in the right location continues to let with, for example, more space being taken at Waters' meeting at the Boys scheme." LIVERPOOL Brian Ricketts MRICS Hitchcock Wright & Partners "Investment market remains uncertain. Until bank liquidity returns to the market, the picture is likely to remain the same. However, if bank lending parameters ease, we anticipate "opportunistic" players will come back into the market anticipating more attractive investment opportunities. In turn, the market will regain confidence once more." CARLISLE Stephen Sewell MRICS Walton Goodland "Investment activity still relatively strong, particularly in secondary investment market. Different story for vacant commercial where yields have moved out considerably. Retail is stagnant and availability of incentives increasing. This has become the case across the board with the empty rating issue on commercial premises. Residential activity in the development market has ceased. That said individuals with cash reserves and developers alike are hungry for bargains. Industrial market remains strong due to lack of supply of land and good level of demand has forced rents upwards across the area." TAMESIDE Martin Andrew Walton BSc FRICS Waltons "It seems as if the entire market is holding its breath waiting to see if we have a soft landing or a slump. Transaction levels are low making market analysis impossible."

PRESTON Graeme Wood BSc MRICS Knight Frank "Generally poor conditions. Poor/limited demand for office/industrial accommodation. Little if no demand for investment property particularly from Institutional investors. Generally very slow." NORTHERN IRELAND BELFAST Ciara Aiken BSc(Hons) MRICS Best Property Services "A lot more property coming to the market driving down values." BELFAST Brian Kennedy FRICS FCIArb O'Connor Kennedy Turtle "Activity down across all sectors, mainly retail property. Demand for retail properties down." BELFAST Rory McConnell MRICS McConnell Martin "The commercial property market in Northern Ireland has experienced a rapid slow-down in recent months although occupier demand in the office and industrial sectors is still reasonable." SCOTLAND ABERDEEN Alan Esson MRICS D M Hall "The current market is still strong in Aberdeen. The demand from owner occupiers is high and the difference between investment and vacant possession values is being eroded. Quality west end rents are rising with headline figures of 30 per sqft being achieved from a strong tenant market. Industrial market still strong." SOUTH EAST HIGH WYCOMBE Stephen Bailey-Kennedy FRICS Duncan & Bailey-Kennedy "We have seen a good level of take up of leasehold industrial/warehouse space in recent months, but this is starting to reduce in terms of new enquiries. A lower demand is being experienced for freehold property." HOVE Colin Brades MRICS Cluttons "The Hove retail, office and industrial sectors are all experiencing the knock on effect of the current difficult economic climate." BRIGHTON Colin Brades MRICS Cluttons "The prime retail market in Brighton continues to hold steady due to limited supply. Secondary retail markets have weakened and there has been an increase in availability in this area. Whilst deals are still happening, tougher trading conditions are being experienced in the office and industrial sector."

BRIGHTON David Clifford FRICS Graves Son & Pilcher "Retail Market conditions are becoming more challenging by the day. Reverse premiums are now regularly expected by potential tenants. Industrial Supply of available property is increasing whereas demand is diminishing. Even freeholds are not creating the same level of interest as previously. Offices Supply of available stock is low but market conditions are difficult and the change in lending criteria has led to a drop in demand for freeholds." READING Damian G Comerford FRICS Dunster & Morton "Marked downturn in enquiries in all sectors." MAIDSTONE Clive Gillingwater BSc FRICS Gooch Cunliffe Whale "As a general comment, the investment market remains very difficult particularly for secondary product." WOKINGHAM Steve Griffin BSc FRICS Pennicott Chartered Surveyors "Despite all the gloom and doom, demand for office space in Wokingham has been encouraging this quarter." TUNBRIDGE WELLS Roger Miller FRICS Michael Rogers "Lettings reasonably strong but freehold sales are very difficult." SOUTHAMPTON Russell Mogridge MRICS Hughes Ellard "A shortage of Grade A out of town office space for Southampton. Phoenix House, Botleigh Grange, Hede End, is the first 24000 sf speculative office for some time and will be snapped up! Demand holding up for industrial sub 10000 sf and offices sub 10000 sf both freehold and leasehold, albeit leasehold enquiries are outstripping freehold." PORTSMOUTH Russell Mogridge MRICS Hughes Ellard "Portsmouth is still starved of freehold office space. Industrial demand is improving for leasehold property. The City are very pro-active in promoting their strengths. The success of the football team and a new stadium promises all add to the confidence of local economy. This combined with the Hindhead tunnel should make the city a worthy place to invest." SURREY Matthew Pellereau FRICS Matthew Pellereau Ltd "The market is in shock! All the doom and gloom is having an effect on business decisions. The occupier market is going the way of the investment market which has been down for a year.

RICS commercial market survey Second quarter 2008 15

WESTERHAM David Robinson MRICS Karrison Commercial "Occupier demand continues to fluctuate. A number of occupiers have recently changed their plans to acquire new offices - often construction related businesses. Demand for quality space remains good - occupiers want the best space, and are prepared to pay top rents. Secondary space, or tired looking buildings are hard to place, and rents here are falling. Owner occupiers are becoming more cautious, as indeed are their banks. Not so many deals, but lack of opportunities means that capital values of offices under 5,000 sq ft are holding up." SEVENOAKS David Robinson MRICS Karrison Commercial "Although Sevenoaks remains a popular and strategically convenient location, occupeir demand continues to fluctuate. Quality space continues to attract quality tenants, whereas secondary space struggles to find any tenants." WINCHESTER James Sawyer FRICS Goadsby "The local office market remains active with many enquiries particularly for larger space which cannot be satisfied. Car parking as ever is an important issue. Retail demand has slowed noticeably with some shops remaining available for some time. Winchester is not an industry based economy, with high house prices and low availability of blue collar labour. The general level of confidence has fallen considerably with many investors/ developers 'sitting on their hands' until a clearer picture of the economy emerges." READING Shaun Walters BSc MRICS Fryer Holt "The market has deteriorated within the last 3 months and the general view is it will continue for the rest of this year." EASTLEIGH Adrian Whitfield MRICS Lambert Smith Hampton "There are a greater number of leasehold enquiries and occupier demand is holding up well. Availability and industrial and office stock remain limited. Rents are being pushed upward to 75 per sq m plus for 2000 sq m plus industrial units." SOUTHAMPTON Adrian Whitfield MRICS Lambert Smith Hampton "Major deals in the future are likely to be pre-let and pre-sales rather than speculative development but availability of sites is limited particularly those for development." FAREHAM Adrian Whitfield MRICS Lambert Smith Hampton "The right product be it industrial or offices in the right location is still letting or selling well. There is a shortage of good quality stock and this will only get worse with a lack of speculative development. There will be upward pressure on rents."

SOUTH WEST SALISBURY Charles Abnett FRICS Myddelton & Major "The effect of the credit crunch is now showing with the absence of small business buyers of property. There are better signs of demand for letting from prospective tenants for those still seeking to expand." YEOVIL A R Edgcumbe FRICS Larkman Edgcumbe Ltd "Note retail voids appearing, but rental levels remain static in secondary pitches and are still in positive territory for prime locations." TAUNTON A R Edgcumbe FRICS Larkman Edgcumbe Ltd "Still demand for smart locations." GLOUCESTER Peter Foyle FRICS Bruton Knowles "Fewer enquiries for all types of commercial property but those received are genuine and of a serious nature" EXETER Andrew Hosking BSc MRICS Stratton Creber Commercial "Transactions are still taking place although landlords and vendors are having to look at ever more innovative solutions and we have noticed in particular the return of lettings with tenants' options to purchase. Short term lettings are also becoming very popular particularly within the industrial sector, partly in response to the empty rates legislation which came in during April 2008." BARNSTAPLE Andrew Hosking BSc MRICS Stratton Creber Commercial "Despite the gloomy reports coming out of the press, commercial property transactions continue to take place in Barnstaple provided landlords offer flexible leases and vendors are sensible on their asking prices." TORBAY Andrew Hosking BSc MRICS Stratton Creber Commercial "The infrastructure works for the White Rock Business Park in Paignton are now well under way and phase 5 of the Torbay Business Park is now virtually all occupied. Short term lets are very popular with occupiers as are lets with options to purchase."

SWINDON Andrew Kilpatrick BSc FRICS ACIArb IRRV Thompsons "Activity levels are down across all 3 main sectors of Swindons commercial market, although there are still people out there wanting to do deals. However, deals seem to be taking longer to conclude with greater risk of amendment or renegotiation during the often tortuous legal process. In addition there are major concerns that Swindon's regeneration aspirations may be blown off course by the economic downturn with a lot of collective breath holding over a number of major development projects." PLYMOUTH Peter Luff FRICS Edward Symons & Partners "We are now seeing reticence in the occupier market as concerns about the health of the economy feed through to decision makers. On the other side of the coin Landlords with empty property are concerned about maintaining high levels of occupation with the reality of empty rate payments concentrating their minds." TRURO Michael Nightingale MRICS Miller Commercial "The office market has quietened markedly during the last month with speculative developers putting proposals on hold, and renewing temporary lets. This has meant that the temporary occupiers have also put their relocation plans on hold." TAUNTON John C O Plimmer FRICS Humberts Commercial "Activity remains reasonable but deals are hard to conclude. There is more space coming to the market but not in such quantities that we cannot accommodate most of it. The investment market is noticeably quieter." WESTON-SUPER-MARE Michael T Ripley FRICS Stephen & Co "No new development taking place. Void rates liability having an effect. Enquiry level reduced but enquiries received are genuine. Retail market very quiet. Industrial market maintained. Office market limited (as usual locally)" POOLE Simon Walsham BSc FRICS James & Sons "Full impact of credit crisis still awaited but effect of increased energy costs having immediate economic effect deflating future confidence." POOLE Chris Wilson BSc FRICS Minst D Goadsby "The rate of fall in investment values seems to have eased up and volumes of activity have risen slightly."

WALES NEWPORT Richard Smith King Sturge "The number of enquiries across the commercial sectors are down, typically 20%, particularly industrial. Empty business rates for industrial is an issue and this with the 'credit crunch 'and general decline in the market is impacting on rents and values at anticipated for industrial units. We feel that if landlords continue to be pragmatic in their approach with flexible lease terms and increased incentives, we will continue to see a steady flow of transactions. Certain areas are holding up where there is no perceived over supply of units." NORTH WALES Gareth Williams FRICS Gareth Williams "Reduced levels of demand are evident across the board with effect on capital and rental values now starting to become apparent. The previously buoyant private buyer investment market has significantly weakened and those buyers who remain active are factoring "risk" into their bids." WEST MIDLANDS WEST MIDLANDS AREA Richard Cariss MBE TD FRICS Richard Cariss Chartered Surveyor "The rental market for industrial premises has noticeably slowed down in the last three months, and there is a definite reluctance by tenants to commit themselves. Similarly activity in the investment market is greatly reduced and buyers are demanding higher yields." STOKE-ON-TRENT Richard Day BSc(Hons) MRICS Daniel & Hulme "Over the last month the market has quietened and the number of phone calls has decreased. As we move into the holiday season, the market will quieten further and we need to look to September for any real positive movement in the market place. There has been a dramatic downturn with a lot more negotiation taking place now." WALSALL Tony Gray FRICS Fraser Wood Mayo & Pinson "A hardening market with deals proving more difficult to conclude."

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RICS commercial market survey Second quarter 2008

STOKE-ON-TRENT David Heywood FRICS Louis Taylor "The market is undeniably quieter than it was, though the quality of the enquiries that we do receive are genuine and viewings are running at satisfactory levels. The investment and retail departments are quietest. Our market is occupier led so that small size deals for local occupiers are continuing satisfactorily. The effect of void rates is encouraging clients to offer much greater incentives in order to achieve a deal." LICHFIELD Graham Jones MRICS Calders "The constant negative attitude and sensationalism of the UK press appears to be feeding through to some businesses who may not yet be experiencing a downturn but now seem to think it is inevitable that a recession will happen and hence their property expansion and other investment plans are being shelved. This has unfortunately coincided with the introduction of void business rates and energy performance certificates to make the market more difficult." WORCESTER Michael Jones FRICS Allan Morris & Jones Commercial "Owner/occupier purchases are keeping the market alive in the urban areas which we cover. Investors have practically disappeared and only "end user" purchases are keeping yields stable in this part of the country. The sale/letting of office space - even prime new air conditioned space etc. has all but collapsed." BURTON-ON-TRENT J A Nichols BSc MRICS Gadsby Orridge Ltd "Very hard work at present, market appears to be 'squeezed' from all angles. Rent free periods up to 12 months in some cases." BIRMINGHAM Mike Price BSc (Hons) MRICS Knight Frank "Occupier demand remains consistent across the West Midlands market, to the extent that Birmingham rental levels should push through 6 psf over the next quarter for the first time. Void rates and uncertain investment returns have very much restricted speculative development. Consequently in due course a shortage of available stock could occur." EVESHAM Anthony Rowland FRICS Timothy Lea & Griffiths "The market is tough. Tenants are very aware of the excess supply of space, in particular offices, and are starting to demand inducements. Also seeing introduction of break clauses more frequently in leases, and everyone is aware of the void rate tax changes which is going to increasingly cause pressure on landlords, as they try and let property."

WORCESTER Roger Wilkins FRICS Wilkins Chartered Surveyors "Demand for secondary office space is poor, but transactions can be achieved by accepting very flexible lease terms. Small factory units still let well, and rentals remain firm. Secondary retail is now declining in demand. Investors are still in the market, accepting lower values. Small private investors are suffering heavily from void rate charges, with an increasing volume coming on the market for freehold disposal, and landlords accepting low rentals just to get occupancy and avoid paying rates. All freehold sales are poor, and values dropping." YORKS HUMBER WAKEFIELD Mike Allott MRICS Allott Associates "The effect of increased empty rates liability has already impacted on landlords with vacant property and rents on new lettings are being agreed below established levels." BEVERLEY Andrew Clark BSc FRICS Clark Weightman "Whilst the number of enquiries has fallen compared to this time last year we are finding that the quality of enquiries has improved. Difficulties in obtaining funding for purchase remains the biggest obstacle in the market place when it comes to completing deals." LEEDS Richard Corby BSc(Hons) MRICS Edward Symmons LLP "Enquiries have definitely fallen after being maintained in the first quarter of the year. That level of optimism by occupiers has now been snuffed out. It will take 12 months at least to rebuild occupier confidence - and that period will only commence when economic factors indicate that a recovery has commenced." YORK Barry Crux FRICS Barry Crux & Company "The overall market has become very subdued very quickly since the spring. There is a marked increase in the number of retail shops in town and city centres becoming available, and they are remaining on the market longer. The office and industrial sectors in York and North Yorkshire have not yet seen such a dramatic fall away in activity, but this is likely to happen particularly in the owneroccupier group as funding becomes ever more difficult. There is no doubt that the banking sectors problems are holding back the property market as a whole. Investors are still around but their activity levels are much reduced again reflecting funding issues. There appears to be a real difficulty with confidence levels in the business community."

YORK Richard Flanagan DipSurv MRICS Lawrence Hannah LLP "Still demand for leasehold product in industrial and retail sectors although office demand remains sluggish. Freehold demand across all sectors remains relatively healthy, particularly for smaller units, driven primarily by owner occupiers." HARROGATE Michael Hare BSc FRICS Feather Smailes & Scales "Levels of confidence from both vendors/ lessors and purchasers/lessees are much lower than previous quarters although there are still people in the market with definite space and investment requirements. We gain the impression many people are holding back to see how far the market will fall before committing to new/alternative space requirements and several investors are playing a waiting game hoping to pick up a bargain. Overall activity is probably at it's lowest level for a number of years although space which is priced correctly is attracting interest and deals are still being done. Lack of confidence and fear of recession are, in our opinion, currently driving the market." HUDDERSFIELD Alex McNeil MRICS Bramleys "There are a number of large regeneration and redevelopment schemes including two rival town centre shopping schemes currently proposed, however the local market and economy is now subdued and is starting to affect the commercial market in all sectors." ILKLEY David Watson BSc FRICS Fawley Watson Booth "Ilkley is somewhat cushioned from nearby Leeds and Bradford activity by the many wealthy individuals who live there and are still interested in shopping and working locally. They also provide a valuable local investor base for property." HARROGATE David Watson BSc FRICS Fawley Watson Booth "Small level of properties offered to Harrogate by local wealthy individuals and investors is wearing thin as the market becomes more depressed." DONCASTER David Watson BSc FRICS Fawley Watson Booth "Retail market here dominated by the new Frenchgate Centre Extension where the product is very good but insufficient retailers have as yet taken space. Office market is small and remains resilient. The whole town has improved dramatically with new developments of the Airport, College. Out of town lakeside park and the elevation of the football club over 3 divisions under its new owner."

RICS commercial market survey Second quarter 2008 17

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RICS commercial market survey Second quarter 2008

Contributor details
EAST MIDLANDS Martin Acton MRICS Cushman & Wakefield 020 7935 5000 James Blenkin FRICS Achurch Phillips Blenkin 0116 254 0382 Brendan Bruder BSc MRICS Abbey Ross 01604 629988 Nigel J B Carnall FRICS W A Barnes 01623 554 084 Ben Coleman BSc FRICS Ben Coleman Associates 01604 660014 N G Corder BSc FRICS Corder Commercial 0115 926 8685 Matthew Cullen MRICS Lambert Smith Hampton 01159501414 Graham Freckelton FRICS Freckeltons 01509 214564 Geoffrey Gibson BSc FRICS Lambert Smith Hampton 01162552694 M D Hammans MRICS Hammans & Associates Ltd 01159 590 834 Matthew Hannah BSc MRICS Innes England 0115 924 3243 Ian Harman BSc MRICS Lambert Smith Hampton 01604 233123 Ian Leather Lambert Smith Hampton 01604 233123 Tim Murgatroyd MSc FRICS Humberts 01476 590013 Alex Reid BSc(Hons) MRICS Mather Jamie 01509 233433 Kevin Skipworth MRICS Snow and Astill 0116 2555 999 Charles Smedley Lambert Smith Hampton 01604 233123 David Smith BSc FRICS Bidwells Drake 01604 632200 John Smith FRICS FAAV R Longstaff & Co 01775 766766 Stephen Smith BSc FRICS King West Blacklee Smith 01604 635400 Vernon Ward BSc (Hons) FRICS Castle Commercial 01455 251771 Richard Wilkins BSc (Hons) MRICS Wilkins Hammond 01246 555511 EASTERN Robert Alston BSc MRICS Robert Alston Chartered Surveyors 01359 233444 Anthony Barker BSc FRICS Barker Storey Matthews 01733897722 Simon Beeton MRICS Derrick Wade Waters 08451 300 400 Johnathan Branch FRICS Douglas Duff 01277 226222 Michael Davies BSc MRICS Davies & Co 01707 274237 Clive Gillingwater BSc FRICS Gooch Cunliffe Whale 020 7408 0030 Guy Gowing MRICS Dip VEM Arnolds 01603 620551 Terence Hair BSc MRICS Hair & Son 01702432255 Stuart T King MRICS Davies King 01462 484 272 David Linnell MA FRICS David Linnell Chartered Surveyors Property Adviser 01707 664400 Jonathan Lloyd MRICS George Hazell & Co. 01284 702626 Alan Matthews BSc FRICS Barker Storey Matthews 01480451578 Mike Phoenix BSc MRICS Brown & Lee 01438 316655 S A Richmond MRICS Edwin Hill 01322 285588 Philip Woolner MA MRICS Cheffins 01223 213666 GREATER LONDON Paul Bennett BSc (Hons) MRICS Nelson Bakewell Ltd 020 7544 2278 Guy Bowring BSc(Hons) MRICS Tuckerman 020 7222 5511 Christopher Burrows BSc FRICS DTZ Debenham Tie Leung 020 7757 6838 Dennis Carlton-Conway FRICS Conway Morris 020 7636 2200 Christian Farmer MRICS CB Richard Ellis 020 7182 2000 A G W Farquhar BSc MRICS Masons Property Advisers 020 7329 2288 Edward Hiller FRICS Hiller & Partners 020 7430 2394 Nigel Hunt FRICS Crossland Otter Hunt 020 7408 1114 Simon Kibble TechRICS Meadowcroft 020 7938 2341 Charles Killen BSc MRICS EA Shaw & Company 020 7240 2255 Glyn Lloyd FRICS Blanchflower Lloyd Baxter 020 7491 7880 Bill Peach FRICS Cushman & Wakefield 020 7514 2373 Michael S Perlin FRICS Michael Perlin & Company 020 7495 7898 Bryan Pontifex MRICS Crossland Otter Hunt 020 7408 1114 Christopher Pryke MRICS George Trevor & Associates 020 7499 2516 Tim Richards MRICS Aston Rose Ltd 020 7629 1533 Jonathan Saxon BA MRICS Knight Frank 020 7718 5200 Nick Sullivan BA MRICS Dobbin & Sullivan 020 8221 9610 Kim White BSc MRICS Kinney Green 020 7643 1500 GREATER LONDON Martin Berg FRICS Michael Berman & Co 020 8446 6505 Clifford Bonnett BSc MRICS Sbh Page & Read 01923 777 666 Guy Bowring BSc(Hons) MRICS Tuckerman 020 7222 5511 Kevin Burke FRICS Frederick Holt & Company 020 7582 9375 Christopher Currell BSc MRICS Currell Commercial Ltd 020 7354 5050 A G W Farquhar BSc MRICS Masons Property Advisers 020 7329 2288 Nigel Hunt FRICS Crossland Otter Hunt 020 7408 1114 Alastair Mason FRICS Bunch & Duke 020 8986 3521 Neal Matthews BSc MRICS Strettons 020 8520 9911 Roger Miller FRICS Michael Rogers 01732 740000 S A Richmond MRICS Edwin Hill 01322 285588 NORTH EAST Simon Hill c/o Tim Powner BSc (Hons) MRICS King Sturge 0191 230 2033 D Jackson BSc MRICS Sanderson Weatherall 01642 808614 D P Johnson BSc MRICS Gerald Eve 0191 260 2555 Karen Shorten BSc (Hons) MRICS Storeys - SSP 079 5782 3907 NORTH WEST Simon Adams FRICS Peill & Company 01228 543 900 Joe Assalone DipArb FRICS MCIArb IRRV Robert Pinkus & Company 01772 769000 Andrew Buckingham BSc FRICS Buckinghams 01270 257924 Brent Forbes BSc MRICS H W Petty & Co 01282 456677 Andrew Gardiner BSc MRICS DTZ Debenham Tie Leung 0161 455 3762 Antony Hill FRICS Antony Hill Partnership 01704 532728 Christopher Charles Johnson c/o Sean Seery FRICS Smith & Sons 0151 647 9272 Paul Nolan MA (Cantab) FRICS Nolan Redshaw 0161 763 0823 Mike Redshaw MA (Cantab) FRICS Nolan Redshaw 0161 763 0823 Brian Ricketts MRICS Hitchcock Wright & Partners 0151 227 3400 Will Sadler MSc MRICS Legat Owen 01244 408200 Stephen Sewell MRICS Walton Goodland 01228 514199 Martin Andrew Walton BSc FRICS Waltons 0161 367 9500 Graeme Wood BSc MRICS Knight Frank 0161 833 0023 NORTHERN IRELAND Ciara Aiken BSc(Hons) MRICS Best Property Services 028 3026 6811 Brian Kennedy FRICS FCIArb O'Connor Kennedy Turtle 028 9024 8181 Rory McConnell MRICS McConnell Martin 028 90 205 900 SCOTLAND Andrew Carswell c/o Dr Edward Trevillion FRICS GVA Grimley LLP 0131 469 6035 Alan Esson MRICS D M Hall 01224 594172 Angela Lowe MRICS Cushman & Wakefield 0131 226 8700 Hilary Matthews MS MRICS Jones Lang LaSalle 0131 225 8344 SOUTH EAST Stephen Bailey-Kennedy FRICS Duncan & Bailey-Kennedy 01494 450951 Colin Brades MRICS Cluttons 01273 223578 David Clifford FRICS Graves Son & Pilcher 01273 321123 Damian G Comerford FRICS Dunster & Morton 0118 955 1700 David Dodgson MRICS Martin Brown 01306 884 685 John Fowler BSc FRICS Lambert Smith Hampton 01908 604630

RICS commercial market survey Second quarter 2008 19

Clive Gillingwater BSc FRICS Gooch Cunliffe Whale 020 7408 0030 Steve Griffin BSc FRICS Pennicott Chartered Surveyors 0118 979 8118 Derek Holloway FRICS Holloway Iliffe & Mitchell 023 9237 7800 Stuart Jerden BA FRICS Pearson Gore 01843 851000 Robert Miller FRICS Cluttons Tod Miller 01903217887 Roger Miller FRICS Michael Rogers 01732 740000 Russell Mogridge MRICS Hughes Ellard 01329 220033 Matthew Pellereau FRICS Matthew Pellereau Ltd 01276 601791 B R Pickett MRICS Woodford & Co 01256 843455 Robert Primmer BSc FRICS Primmer Olds 02380 222292 S A Richmond MRICS Edwin Hill 01322 285588 David Robinson MRICS Karrison Commercial 01959 563888 James Sawyer FRICS Goadsby 01962 869667 Shaun Walters BSc MRICS Fryer Holt 0118 939 3333 Adrian Whitfield MRICS Lambert Smith Hampton 023 8033 0041 John M Wittebolle FRICS John M Wittebolle 01483 274 588 SOUTH WEST Charles Abnett FRICS Myddelton & Major 01722 337 577 A R Edgcumbe FRICS Larkman Edgcumbe Ltd 01823 323523

Tim Edwards BSc (Hons) MRICS Dreweatt Neate 01225 753 660 Peter Foyle FRICS Bruton Knowles 01452 880000 Clive Gillingwater BSc FRICS Gooch Cunliffe Whale 020 7408 0030 Andrew Hosking BSc MRICS Stratton Creber Commercial 01392 202 203 Andrew Kilpatrick BSc FRICS ACIArb IRRV Thompsons 01793 643101 Peter Luff FRICS Edward Symons & Partners 01752 222233 Paul Maguire FRICS John Ryde Commercial 01242 576 276 David Alan Monk MRICS Monk & Partners 01752 255 222 Michael Nightingale MRICS Miller Commercial 01872 274 211 John C O Plimmer FRICS Humberts Commercial 01823 331 234 Simon J Pontifex FRICS S P A Chartered Surveyors 01242 255 242 Michael T Ripley FRICS Stephen & Co 01934 621 101 Adrian Rowley MRICS Alder King 01452 623290 Tim Smith BSc (Hons) MRICS Stags 01392 680058 Simon Walsham BSc FRICS James & Sons 01202 673131 Paul Whitmarsh MRICS Whitmarsh Preece Lockhart 01793 541000

Chris Wilson BSc FRICS Minst D Goadsby 01202 550000 WALES Richard Ryan c/o Chris Terry BSc MRICS Fletcher Morgan 02920 378921 Richard Smith King Sturge 029 2022 7666 Huw Thomas BSc FRICS King Sturge 02920 227666 Gareth Williams FRICS Gareth Williams 01745330077 WEST MIDLANDS Martin Acton MRICS Cushman & Wakefield 020 7935 5000 Richard Cariss MBE TD FRICS Richard Cariss Chartered Surveyor 01926 641380 Richard Day BSc(Hons) MRICS Daniel & Hulme 01782 213344 Tony Gray FRICS Fraser Wood Mayo & Pinson 01922 629 000 Martin Guest BSc MRICS CB Richard Ellis 0121 609 7666 David Heywood FRICS Louis Taylor 01782260222 Graham Jones MRICS Calders 0182761144 Michael Jones FRICS Allan Morris & Jones Commercial 01527 879966 J A Nichols BSc MRICS Gadsby Orridge Ltd 01332 290 390 Jonathan Preece BSc MRICS Jonathan D Preece Surveyors & Commercial Agents 01989 768 555

Mike Price BSc (Hons) MRICS Knight Frank 0121 233 6449 Anthony Rowland FRICS Timothy Lea & Griffiths 01386 862770 Andrew Venables MRICS GVA Grimley 0121 236 8236 Roger Wilkins FRICS Wilkins Chartered Surveyors 01905 723722 YORKS HUMBER Mike Allott MRICS Allott Associates 01924 375700 Mark Brearley MRICS Mark Brearley & Company 01274 595999 Simon Andrew Chadwick FRICS Chadwicks 01904 780 080 Andrew Clark BSc FRICS Clark Weightman 01482 645522 Richard Corby BSc (Hons) MRICS Edward Symmons LLP 0113 245 8454 Barry Crux FRICS Barry Crux & Company 01904 659 990 Richard Flanagan DipSurv MRICS Lawrence Hannah LLP 01904 659 800 Michael Hare BSc FRICS Feather Smailes & Scales 01423 501 211 Alex McNeil MRICS Bramleys 01484530361 Richard Peak BSc Hon MRICS Reeves & Co 01904 683800 B N Seal BSc MRICS Wilbys 01226 299221 David Watson BSc FRICS Fawley Watson Booth 0113 234 7900

Michael Stuart Westlake FRICS Westlake & Co 01756 748 100

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RICS commercial market survey Second quarter 2008

RICS Contacts Commercial property market information

For general information about the commercial property market, contact the RICS Library information service on FAX : 020 7334 3784. For information on the Scottish commercial property market contact Elizabeth Bruce at RICS in Scotland, on tel 0131 225 7078

The commercial market survey is available from the RICS web site - www.rics.org, along with other monthly/quarterly surveys covering residential sales & lettings, construction activity and the farmland market.

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