Is the Welsh property market a good bet for investors? The latest figures from RICS show a mixed bag, with industrial space booming while office and retail face tough times.

The Royal Institution of Chartered Surveyors (RICS) has just released its latest commercial property report for Wales, and it shows that occupier demand for commercial property in Wales fell in the second quarter of 2023, after rising in the first quarter.

Industrial Sector Outperforms

The report highlights a stark divide in the Welsh commercial property market. The industrial sector is still performing well, with strong demand and rising rents, particularly along the M4 corridor.

For example, in Newport, St Modwen Park is seeing rents of over £9.00 per square foot for Grade A large industrial units. KLA has also just finished developing a 220,000 sq ft production and R&D facility at Imperial Park.

Office and Retail Struggles

In contrast, demand for office and retail space has fallen.

Office Space:

• The report states that a net balance of -25 per cent of surveyors reported a decline in office space demand.
• This is partly due to companies adjusting their office footprints to accommodate new working practices and increased use of technology.
• While Grade A office space remains in demand in Cardiff, there’s a lack of supply for smaller office units (3,000 to 5,000 sq ft).

Retail Space:

• The report shows that a net balance of -27 per cent of surveyors reported a decline in retail space demand.
• City centre retail continues to struggle, with some small market towns doing better.

The Outlook for Investors

So, what does this mean for investors? The industrial sector looks like a good bet. But for those interested in office and retail space, the picture is less clear.

Key Takeaways:

• Industrial: Strong demand and high rents, particularly along the M4 corridor.
• Office: Demand for Grade A office space is still good, but there’s a lack of supply for smaller units.
• Retail: City centre retail is struggling, but some smaller market towns are doing well.

Investors need to be aware of these trends before making any decisions. The Welsh commercial property market is diverse, and it’s essential to understand the specific challenges and opportunities in each sector.