Report: Industrial sector drives uptick in Northern Ireland commercial property demand

Expectations for the commercial property market in Northern Ireland improved as overall demand from occupiers increased for the first time in almost two years, according to a new report.

The Q1 2025 Royal Institution of Chartered Surveyors (RICS) Commercial Property Monitor found a net balance of 6% of NI respondents reported a rise in overall occupier demand, with both office and industrial space seeing an increase. The last time this net balance was in positive territory was Q2 2023. A net balance of 6% saw a rise in office space and a net balance of 25% in industrial.

In line with this overall improvement in demand, respondents expect rents to increase in the short-term. A net balance of 17% expect rents to rise at an all-sector level over the next three months, which is the highest this balance has been since 2018. Rents in both the office and industrial sub-sectors are anticipated to rise through the next quarter.

Respondents report a less positive picture in the investor market, however.

Investor demand was marginally lower in Q1 according to respondents, with a net balance of -4 % reporting a decline. However, this represented an improvement compared to the corresponding quarter of 2024 (-12%). Looking at the subsectors, industrial space was the only one to see a rise in investor demand, with a net balance of 25% reporting an increase. Both retail and office space saw declines in investor demand, with net balances of -25% and -13% respectively.

When it comes to capital value expectations, respondents remain cautious in the short-term. A net balance of -7% of NI surveyors expects capital values to fall over the next three months. Looking at the subsectors, capital values for office and retail space are expected to decline (both seeing net balances of -33%). The industrial sector continues to outperform the other subsectors, as a net balance of 47% of NI respondents anticipate capital values for this space will rise in the three months ahead.

RICS added that while surveyors are hesitant overall on the short-term outlook, they are more optimistic on the 12-month horizon. A net balance of 14% of NI respondents expect capital values to rise over the next year at all sector level, the highest this balance has been in three years.

Garrett O'Hare, RICS NI commercial property spokesperson and managing director of Bradley NI, said: "The commercial property market in Northern Ireland continued to face challenges with a variety of highs and lows depending on the asset class and location.

"The industrial sector continues to outperform the other subsectors, with demand continuing to outweigh supply, albeit demand has eased back somewhat since the influx of occupiers on the back of Brexit. It’s encouraging to see that retail is showing some signs of improvement with increased occupier demand in high footfall locations, but with rents remaining relatively low.

"The prime office market with larger floor areas remains under pressure, while small spaces and serviced offerings remain attractive due to their flexibility and cost effectiveness. Whilst it’s promising to see that surveyors are more optimistic on the overall outlook of the commercial property sectors, there are still many obstacles in the way.”