DEMAND for commercial property may be outstripping supply in the south-east and holding back growth, according to the latest survey of property trends published by employers group the CBI and property advisers GVA Grimley.

Thanks to higher than average business growth and strong increases in employment, demand for commercial property has been robust and ahead of expectations in the last six months. And companies are even more positive about their demand for property over the coming six months.

The factor most now fear will hold them back is a lack of suitable property. By contrast, access to and cost of financing the next commercial property deal is the least troubling.

Malcolm Hyde, CBI South East regional director, said: "With a solid economy the rise in business output and employment is pushing up demand for commercial property. Our concern for parts of the South East is that there aren't enough suitable business properties to satisfy demand.

"It is vital that the planning system acknowledges the strong relationship between commercial property and economic growth and acts accordingly to ensure developers can deliver what business so obviously needs in terms of premises."

The twice-yearly survey of occupiers - which takes in offices, shops, factories and warehouses - shows that over the last six months 31 per cent increased their property holdings while 11 per cent reduced them. That amounts to a significant improvement since the last survey in the summer. Some 25 per cent expect the amount of property they occupy to increase in the next six months.

Output rose over the last six months for 41 per cent of property holders. This growth is expected to slow next year, in line with the long-term average.

Meanwhile, employment increased for 38 per cent, particularly in banking and finance, where 42 per cent took on more staff.

In terms of the types of property in demand it's a mixed picture but still in line with the performance of the UK economy.

Demand for retail property grew for 18 per cent, a little above the long-term average of 13 per cent and slightly up against the last survey six months ago. Healthy demand is expected to continue for this sector, with 19 per cent expecting it to grow.

Office property was broadly stable. The balance in the manufacturing sector of zero per cent shows demand for factory space has stalled. The balance for the next six months stands at minus two per cent, the only negative balance for expected demand in the survey.

Malcolm Hyde added: "Demand for property has been robust in the retail sector in the last six months, while office property holders are optimistic demand will increase over the next six, having been reasonably stable recently. With manufacturers in the south-east continuing to shed jobs there has been no increased demand for factory space and we do not expect the next six months to be any different."