Distribution property demand lagging behind

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Occupier demand for commercial property hit a two-year high over the past six months as confidence rose for the first time in 18 months, according to a report by the CBI and property adviser GVA Grimley. However, the twice-yearly survey, covering offices, shops, factories and warehouses, reveals that demand for distribution property is fall is down.

According to the Winter 2003/4 survey, a net balance of 4% of respondents reported an increase in their warehousing and distribution property holdings over the past six months. In the past three years, demand for such property has been almost unchanged with a positive balance ranging between 3% and 5%.

However, having shown the highest level of demand of all four property sectors, the distribution sector has been overtaken by both the office and retail markets. The CBI and GVA Grimley expect little change in demand levels in the distribution sector over the coming months with just 3% of respondents planning to increase their distribution property holdings.

The survey shows an overall balance of 19% of companies increased their property holdings over the past six months, marking a significant turnaround since the first half of 2003 when a balance of 5% decreased their property holdings. Companies expect a similar level of demand over the next six months.

Despite rising levels of business optimism and output, employment fell over the second half of 2003, with most jobs lost in the manufacturing sector. Firms now expect a modest improvement in the overall trend for employment, led by the construction and distribution sectors.

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