The office market took the brunt of the downturn, with 47% more surveyors reporting a fall in demand, than a rise. Confidence in this sector plummeted from 3% of RICS members expecting falls in quarter four 2002, to 47% expecting further falls over quarter one 2003.

However, there has been a slight upturn in confidence in the retail sector reflecting the current pattern of strong consumer spending.

Weakness is focused on London where the office dip has been compounded by a weaker industrial sector. However, the picture remains more favourable around the rest of the country. Demand conditions in the South held up, and the Midlands and Wales were helped by a surge in retail take-up, and confidence remained firm in the North.

But for any business still in a position to take new premises the downturn could be good news, The survey shows a significant increase in incentives and inducements offered to tenants, reflecting a swing of bargaining power away from the landlord and towards the tenant.

RICS chief executive, Louis Armstrong, said: "There is little cause for cheer in the UK commercial property market at the moment although there are many firms, especially outside London who remain unscathed. A turnaround in business investment would prevent the London malaise spreading but it is very difficult to say when this might happen in the current climate of global economic uncertainty."