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LONDON-Business demand for commercial property is declining, according to the latest CBI/GVA Grimley survey. For the first time in five years more companies were shedding space during the past six months than were acquiring. But looking ahead, a balance of four% expect an increase in their floorspace in the next six months.

More than half of the firms–61%–did not increase or decrease their property holdings over the past six months with companies adopting a ‘wait and see’ approach in the face of economic and global uncertainties.

The upturn is likely to be led by the retail sector, with a positive balance of 12% of retailers expecting to increase their property holdings in the next six months, compared with a negative balance of 1% in the last survey. But demand in the office sector is expected to weaken further, with a balance of 4% expecting to decrease their property holdings over the next six months. In the industrial property sector, demand is stronger for distribution property than for manufacturing property.

Regionally, London and the South East has been hardest hit by the market slump. It moved from being the best performer six months ago, with a positive balance of 15%, to being the worst performer with a balance of plus 1%.

Stuart Morley, Head of Research at GVA Grimley, said: “We regard the positive balance of companies expecting to increase their property holdings over the next six months as encouraging. Nevertheless, with many firms holding more office space than they require, it is unsurprising that a balance of companies expect to reduce their office holdings over the next six months.

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