Year to forget for region's commercial property sector
THIS year has been dominated by the lack of activity caused by the Covid 19 pandemic combined with uncertainty over whether there will or won't be a Brexit deal.
Transactional retail activity virtually ground to a halt following the closure of non-essential retail on March 23 and the high streets throughout Northern Ireland were all but deserted for the following 12 weeks. Towards the end of the year restrictions were relaxed only to be tightened again as the “R” number increased during September and October leading to further partial (and now this latest full) lockdowns.
With the majority of office-based workers working from home, we became proficient in Zoom and Microsoft Teams calls and questions were being asked about the future of offices as well as retail given the ability of many to work and shop from home.
Industrial and logistic operators appear to be the least affected by the pandemic and provided a vital service when the majority of mainstream retailers were closed. Demand from logistic companies and those supplying PPE remained strong through the year even though the unknown impact of Brexit is looming large on this section of our economy.
Investment volumes for 2020 were more than 50 per cent below their five-year average of £275/£300 million a year, with the majority of transactions happening in quarter one, prior to the pandemic. The most notable transactions were the sale of Abbey Retail Park and the Amazon distribution warehouse in Titanic Quarter in quarter four.
Take up for offices for the first three quarters of 2020 totalled just over 105,000 sq ft, and at the year end we would expect this not to exceed 125,000/130,000 sq ft as office occupiers delay their decision-making processes. Again, the 2020 total is well below the five-year average of 350/400,000 sq ft.
The retail transactional market virtually ground to a halt with the onset of the first lockdown and this has been a difficult year for non- essential retailers on the high street. The pandemic has sped up ongoing structural changes in the way we shop and has forced many who have never shopped online before to do so for the first time. Online sales in the UK have almost doubled compared to 2019 with nearly 38 per cent of all sales in 2020 being online
Retail parks and food stores have bucked the trend and many retailers in these locations who have been able to stay open throughout 2020 have performed well. A notable example is the expansion of The Range, with the opening of its new 65,000 sq ft flagship store in October on Belfast's Boucher Road.
As we look forward to 2021 we have cause to be optimistic given that the UK started to roll out its Covid 19 vaccination programme, and it is expected that the majority of the Northern Ireland population will be vaccinated by next summer.
But the economic backdrop will be challenging. The Northern Ireland economy is set to decline by 15 per cent in 2020 and grow by just over 7 per cent in 2021, according the Ulster Bank, and it is not expected that we will return to pre-covid levels of activity until well into 2023.
Notwithstanding those immediate economic forecasts, our cause for optimism is that we can see there will be an end to the pandemic and normality will return. This may well be a place where social and technological trends have accelerated causing considerable change to accepted occupational trends.
:: Declan Flynn (firstname.lastname@example.org) is managing director of Lisney (www.lisney.com) in Belfast