THE call for office space in the South East is rising at its fastest pace for four-and-a-half years, reports the Royal Institution of Chartered Surveyors (RICS).

It is in-keeping with the level of national demand according to RICS’ latest survey.

Rising interest rates and high levels of debt mean consumers are driving down prices in shops. Retailers are feeling the pinch and some are looking for lower overheads and increased sale volumes in out-of-town locations and away from the High Street.

The engine of growth is office demand, which has risen consistently for the last 15 months.

A strong demand for rented property has not prevented further declines in lease lengths, although the 'Tenant's Satisfaction Survey' published by RICS is expected to show tenants are not satisfied with overall service levels.

Trevor Hines, RICS South East director, said: "Office demand is still driving the commercial sector, although the industrial and particularly retail sectors look set to pick up in 2005.

"Fears of an economic relapse seem so far unfounded as rising real estate demand points to improving corporate confidence. The picture is consistent with a steady recovery in the UK economy.

"Occupier demand for property is rising steadily but investor appetite for commercial real estate is booming. An influx of funds from pension funds and private individuals reflects disappointment with recent performance of equity markets globally."