Demand for retail property slumps to nine-year low
DEMAND for retail property in the north fell to its lowest levels in nine years at the start of 2018, according to the latest market report.
The RICS (Royal Institution of Chartered Surveyors) and Ulster Bank Commercial Market Survey covering the first three months of the year shows occupier demand for retail property in Northern Ireland has slumped, but in line with an overall trend observed across the UK.
Overall demand for commercial premises in the north remains positive however, with respondents reporting increases in demand for industrial and office space.
Although retail rent expectations eased for the third quarter in a row, unlike all other areas of the UK they still remain in positive territory for the next quarter. Expectations for increased rent in the industrial and office sectors have also risen.
On the investment side, interest from potential investors rose overall, with the office and industrial sectors faring well, but unsurprisingly enquiries in the retail sector fell.
The latest survey has also revealed an increase in foreign investment enquiries for the first time in two years, albeit from a low base. The spike was attributed to increased interest in the office and retail sectors, with industrial premises experiencing a fall.
In short term the expectation that capital values will increase has strengthened and despite a more pessimistic outlook within retail for the next three months, over the year it is positive across all sectors.
RICS Northern Ireland commercial property spokesperson, Tracy Flannigan believes that retail aside, the figures are encouraging.
“Overall the commercial market is presenting a positive picture, but despite encouraging figures in the last quarter of 2017, the market for retail property is experiencing difficulties with demand for lettable space at its lowest since 2009. This is exacerbated by the demise of Toys R Us and New Look's company voluntary arrangement."
“The office market remains robust with Grade A office rents maintained at 2017 levels and expectations are for rents to show growth as the supply of Grade A accommodation is taken up," she said.
Gary Barr, relationship director for commercial real estate at Ulster Bank, added:
“It is encouraging that surveyors are reporting rising demand overall from both occupiers and investors. There are no doubt challenges ahead for retail but at Ulster Bank we continue to support a wide range of property deals and see firm demand for investors in quality assets.”