Weighty public sector 'shielding retail in north from wider UK woes'
A WEIGHTY public sector has helped protect Northern Ireland from the worst effects of a UK retail shake-up which has seen major recent casualties, commercial property experts Colliers International claim.
The agent, which has a key regional office in Belfast, also warned that retail property transactions - which had been relatively strong in the latter half of 2017 - had slowed considerably since January due to Brexit uncertainties and the lack of a functioning Executive.
And in a bid to secure the retail sector's future growth in the face of online challenges to maintain its relevance and dynamism, it has put forward a detailed five-point plan designed to help revive its fortunes.
The plan includes the introduction of standard five-year leases, rent payments based on turnover, mutually-agreed breakout clauses which are based on turnover thresholds and the use of more incentives including rent-free periods.
In its Midsummer Retail Review, Colliers said Northern Ireland's retail landscape was changing fast and that the outlook was becoming more difficult to predict in a market where company voluntary arrangements (CVAs) are increasingly being used.
CVAs help troubled retailers to stay in business by allowing them to negotiate lower rents or other concessions.
But their use has been criticised for creating less transparency in the market.
“Since January there has been limited transactional activity and perhaps further investment will be based on the reformation of the Executive and signs of certainty following Brexit,” said Jonathan Millar, head of Colliers International in Belfast.
“The public sector is certainly one of the less volatile parts of the economy and is a highly relevant factor when looking at a location's ability to withstand turbulence in the retail market.”
In Belfast alone, around a third of employment is linked to public sector activity, significantly higher than the UK average of 25 per cent and 21 per cent in London.
Millar also said that while it was positive that Northern Ireland had kept itself clear of the House of Fraser and M&S store closure lists, with the latter adding stores in two new locations, challenges – including the growth of internet sales – remained.
Out-of-town retail interest remains strong, Colliers said, with a steady flow of new openings led by Lidl NI, The Range, Home Bargains and EZ Living supporting regional activity, while in Belfast, transactions in the leisure, food and retail sector continue apace.
Colliers said that in the last 12 months, around £340 million worth of real estate was traded in Northern Ireland and that retail, through 28 transactions, accounted for around 70 per cent of investments made.
“Retail is evolving at a rapid rate and those quick enough to adapt will see satisfactory financial results,” Millar said.
He added that the agency's five-point plan is aimed at helping retailers access viable trading space, while at the same time enabling retailers, landlords and investors to find occupiers for the rising number of empty units across towns and cities in the north.