Confidence is slowly returning to the commercial property market on the back of reports from surveyors that the fall in tenant demand for offices and shops has started to slow.

Demand for commercial property still fell in the second quarter of 2009, according to a report from the RICS today, but the pace of decline slowed markedly. The net balances for new inquiries from tenants and confidence were the least negative since the downturn began late in 2007.

After a two-year slump in capital values, there are expectations that property prices will come under pressure from the fall in rents caused by the shortage of new occupiers.

Tenant demand for offices and shops in the UK has been hard hit by the economic downturn, with few businesses looking to expand or take on new lease liabilities.

Financial Times