Buoyant markets could be hit by lack of flood insurance

The key findings of the survey included a net balance of 54 per cent of surveyors across the North seeing rising demand for commercial property, compared to a national average of 42 per cent.

But surveyors are not seeing the trend translate into higher rents, said the Royal Institution of Chartered Surveyors (RICS), which published its latest commercial market survey today.

The North has seen higher demand than other UK regions in all commercial sectors, with the exception of London; 43 per cent of surveyors are seeing demand for retail space, 41 per cent for office space and 68 per cent for industrial space.

However, the North has experienced a particular squeeze on availability, with all sectors aside from office space seeing higher than average supply constraints.

Rent expectations are weak, with a net balance of 19 per cent of surveyors expecting rent levels to increase throughout the year, the research found.

There are also concerns over the impact on regional recovery across the UK as a result of yesterday’s reading of the Water Bill, which dictates that commercial premises will not be covered by the government’s Flood Re insurance scheme.

Under Flood Re, every household in the country will pay a small levy on their insurance premium to fund a pooled subsidy for those most at risk of flooding, to ensure they can still obtain affordable home insurance.

RICS suggested businesses in flood risk areas may not be able to afford appropriate insurance.

Simon Rubinsohn, RICS chief economist, said: “The economy ended 2013 on a much more positive note and this was reflected in stronger demand from tenants for shops, offices and industrial space. The more upbeat picture is even beginning to filter through to rents although the improvement is still fairly tentative in most parts of the country.”

But Jeremy Blackburn, RICS UK head of policy, said: “While signs are much more positive for the commercial sector it was disappointing to see that the Government are going to allow the Water Bill to pass without reference of commercial premises and business owners’ rights to affordable insurance cover.”