However rental and capital value expectations in both the short and longer term improved.

Whilst occupier demand at an all-sector level was flat, at a sub-sector level, both office and industrial space saw increased demand (net balances of +8% and +18% respectively). Demand for retail space, on the other hand, fell, with a net balance of -21% of respondents reported.

As occupier demand remains subdued, availability saw an increase, with a net balance of +12% of Scottish surveyors reporting a rise. Looking at the subsectors, both office and retail space saw increased availability (+14% and +33% respectively). With occupier demand for industrial space the highest out of the three subsectors, it is unsurprising that availability for this type of space is in decline with a net balance of -12% of respondents noting a fall.

Looking at investor demand, a net balance of -20% of respondents saw a fall in the last quarter of the year. However, this figure is an improvement from -34% in Q3. Broken down by subsector, a net balance of 5% of respondents noted a rise in enquiries for industrial space, and net balances of -26% and -38% saw falls in investor enquiries for office and retail space respectively.

With regard to 3-month expectations, there were improvements regarding both rental expectations and capital value expectations at an all-sector level. But whilst three-month rental expectations at an all-sector level were positive for the third successive month, three-month capital value expectations are still in negative territory, albeit less so than in the previous survey.

On the 12-month outlook, capital value expectations improved, with a net balance of 7% of respondents in Scotland anticipating a rise, the first time this figure has been in positive territory since Q2 2022. Surveyors expect increased capital values in both office and industrial space (net balances of 12% and 33% respectively). Regarding 12-month rental expectations, the all-sector balance is positive for the first time since June 2022, Surveyors expect rents in both the office and industrial sectors to rise.

Graham Mitchell of George Davie in Glasgow commented: “There are signs of recovery in the marketplace and there are increases in enquiries and demand. There are sectors that are definitely seeing improvements in enquiries and business activity.”

Paul Kettrick, of Falkirk Council added: “Industrial demand is buoyant locally due to infrastructure investment programmes”.

John White of Hunting Real Estate in Glasgow, said: “Offices are probably nearing the bottom of the cycle, as is retail. However, the lack of supply of development land for industrials will continue to drive rents forward.”

Commenting on the UK picture, RICS senior economist, Tarrant Parsons, added: “Current conditions remain challenging across the UK commercial property market, with investor demand still being weighed down by the tighter lending climate and uncertain outlook for values.

“At the same time, relatively weak momentum with respect to economic activity more generally is taking its toll on tenant demand, with the ongoing structural challenges facing parts of the office and retail sectors also hampering market sentiment. That said, the significant turnaround in expectations for monetary policy of late provide a reason for cautious optimism going forward, and the latest results do point to a more stable backdrop for credit conditions coming through this quarter.”