LONDON, Oct 29 (Reuters) - Demand for British retail and office space contracted sharply during the third quarter and the outlook for the year ahead has worsened as working and shopping patterns change during the COVID-19 pandemic, a survey showed on Thursday. The Royal Institution of Chartered Surveyors said 78% of chartered surveyors viewed the commercial property market as being in a downturn, up a little from 76% in the second quarter. While there were clear signs of a pick-up in the industrial sites such as warehouses for online stores, there was little cheer from the office and retail sectors which saw another sharp fall in demand - albeit less severe than in the second quarter.eparate figures from insolvency practitioners Begbies Traynor Group showed more than half a million businesses were in ‘significant distress’, up 6% over the past three months - though only a small fraction faced legal action, due partly to reduced court capacity. “With so many businesses limping along there could be a flood of insolvencies when the courts do get back to anywhere near normal capacity and attempt to clear the backlog of pending cases,” said Julie Palmer, a partner at the firm. Firms in the real estate, hospitality, retail and construction sectors were struggling, Begbies Traynor said.