The eurozone crisis, economic uncertainty and limited bank lending will continue to hit commercial property activity in the West Midlands for the rest of the year, according to a new report.

But investors are moving towards the prime end of the market, particularly in offices, meaning that average deal sizes have nearly doubled over the previous quarter.

Although investors are returning to the market in London and the south east, activity in the rest of the country continues to be restrained, according to Lambert Smith Hampton’s latest quarterly analysis of the market – UK Investment Transactions Q3.

The report also identifies a move away from traditional asset classes into other areas, particularly hotels and leisure.

Adam Ramshaw, associate director in the Birmingham office of LSH said: “The continuing uncertainties in the eurozone and the future of the UK economy have resulted in a decline in sentiment among property investors. Declining market sentiment means investors will continue to focus on the prime end of the market. The economic situation means investors are still cautious when it comes to either secondary assets or prime assets in less desirable locations.”

He added, “While the market is subdued, a lasting solution to the eurozone debt crisis would provide a much needed fillip, increasing confidence and acting to reduce some of the negative sentiment.