While 21% of surveyors reported a drop in commercial property transactions over the first quarter of 2002, 16 % reported a rise. The net fall of just 5% indicates a continued slowdown, but contrasts dramatically with the 38% fall notched up in the final quarter of last year.

For the first time in twelve months new enquiries rose, indivcating that more businesses are now considering taking on new premises. Demand for office and retail premises fell in the first quarter but by much less than the previous one and occupation of industrial property rose for the first time since the opening quarter of 2001.

However, it is still a tenants' market and landlords have been forced to increase the value of financial incentive packages--such as rent free periods--on offer to new tenants. Lease lengths on all types of property have also fallen.

RICS Commercial Faculty Chairman Graham Chase said: 'The recovery in confidence of RICS members in commercial property is encouraging and is in line with other economic indicators. This improvement should not be taken as a sign that rents are likely to rise sharply, but it does suggest that current values are underpinned by activity which is clearly on the increase both in the business and retailing sectors.'