LONDON, May 5 (Reuters) - Tenant demand for commercial property space in the UK continued to fall in the first quarter, while a record rise in vacancies is expected to speed up the rate of rental declines, a report showed on Tuesday.
According to a survey by the Royal Institution of Chartered Surveyors (RICS), a net balance of 40 percent of surveyors reported a fall in occupier demand in the first quarter of 2009, although this eased from 71 percent in the last quarter of 2008.
"Whilst indicators have moved off historic lows, the reality is that fundamentals in the occupier market continue to deteriorate as companies remain in consolidation mode," Oliver Gilmartin, senior economist at RICS, said in a statement.
The net balance of surveyors reporting a rise in available floor space at offices, factories and shops rose at the fastest pace in the survey's 11-year history, to 65 percent from 57 percent in the previous quarter, RICS said.
The ongoing economic downturn and continued rise in vacancies made more respondents feel pessimistic about the outlook for rents, with 80 percent of surveyors expecting them to fall, up from 71 percent in the previous quarter, it said.
The outlook for leasing activity also remains poor, as a net balance of 38 percent of surveyors saw a fall in new enquiries for business space, the report added.
(Reporting by Daryl Loo; editing by Simon Jessop) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)