DEMAND for industrial premises in Scotland continues to outstrip supply due to the popularity of online shopping, according to a new survey.

The latest Royal Institute of Chartered Surveyors (RICS) Commercial Property Market Survey found the availability of vacant industrial units dropped during April to June.

Overall occupier demand for commercial property remained negative, continuing a trend of more than a year.

Lack of demand for retail units is responsible for pulling the figure below zero, with a net balance of minus 53% of respondents reporting a decline in this sector.

More than a quarter of respondents (27%) reported an increase in demand for industrial property in the past financial quarter and 18% said the office sector had risen in the same period.

The survey, which covers the second financial quarter of 2019, recorded a net balance of 41% of participants noting an increase in retail sector availability, leading retail landlords to raise the value of incentive packages on offer to tenants in an attempt to encourage business. Commercial property rents in Scotland are expected to dip marginally over the coming months, with the negativity again coming from the retail sector.

For office rents the outlook appears relatively flat whereas the industrial sector is expected to grow.

Across the UK, Scotland had the only positive reading for foreign investment inquiries between April to June, with a net balance of 2% more respondents reporting an increase.

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For overall investor demand in Scotland, the figure remained negative at a net balance of minus 6% but improved on the minus 19% of January through on to March.

More than half (51%) of respondents across Scotland feel the market is in some stage of a downturn.

In the face of Brexit, respondents across the UK report evidence of firms looking to relocate part of their businesses as a result. Between April and June, 32% said they have seen this, which is unchanged from the previous three months but up 23% on six months ago.

More than half (52%) of respondents nationally expect relocations, depending on how the Brexit process may unfold in the coming months.

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Tarrant Parsons, RICS economist, said: “The overall picture remains little changed across the UK commercial property market in quarter two, with the disparity between a strong backdrop for the industrial sector and weakness in retail still very evident.

“While expectations continue to point to solid rental and capital value growth in the former, further declines are expected in the latter.

“Brexit uncertainty also remains a notable headwind, causing caution across both occupiers and investors while they await clarity on the UK’s future trading relationship with the EU.”