Following on from reports of falling portfolio values within the sector, commercial property experts have warned landlords to expect rents to fall in 2008.

According to new predictions published by the commercial property estate agents DTZ, demand for office accommodation could fall by between 15 and 20 per cent over the coming year as banks and other financial institutions look to reduce their overheads on the back of the credit crunch.

Furthermore, this reduction in rental demand is also likely to reduce the chances of the market making a swift recovery but instead prompt the increased availability of special offers such as rent-free periods for new tenants.

Commenting on the state of the sector, JJL director of capital markets Andrew Hynard told the Daily Telegraph: "I think the first quarter of 2008 will be pretty slow, and we will see the pick-up in quarter two.

"However, the fall in capital values is likely to keep the overall value of transactions lower in 2008 than 2007."

According to the end of year figures from Knight Franks, prices in some areas of commercial property have fallen by as much as 26 per cent over 2007.