Retail woes intensify while office and industrial sectors brighten
Interest from both occupiers and investors in retail property fell to its lowest point in six years in the second quarter (Q2) of the year as the sector remains under pressure according to the latest Commercial Market Survey from the RICS and Ulster Bank.
Demand from both tenants and investors for retail property continued to go lower according the balance of respondents to the survey, and contributors anticipate a further fall in retail occupier demand, in line with the trend across the rest of the UK.
Retail saw the weakest occupier demand since March 2012 (a net balance of -50% said that occupier demand in the sector fell) and investment enquiries saw the biggest drop since December 2011 (a net balance of -33%).
In contrast, the mood in the office and industrial sectors was considerably more upbeat the survey reveals.
In both, there were rises in occupier demand, three-month rent expectations, and three-month capital value expectations.
Enquiries from both UK and foreign investors were down at an all-sector level. However, the picture regarding investment enquiries was less downbeat for industrial and office property than it was for retail.
“It’s certainly a challenging time for the retail sector in Northern Ireland, as it is across the UK, with consumer confidence weak and retail footfall under pressure,” said Andy Tough, chair of RICS in Northern Ireland.
“The challenges being faced by the sector, not surprisingly, come through in the latest set of survey results. But it’s certainly not all bad news in the commercial market, with some bright spots in the industrial and office sectors.
“Both sectors remain fairly robust in terms of rent expectations and capital value expectations for the next quarter.
“Indications from the survey that the availability of office accommodation is increasing will also provide positive news for many, particularly in relation to efforts to attract further inward investors.”
Gary Barr, relationship director for commercial real estate at Ulster Bank said: “Rising demand in the office and, to a lesser extent, the industrial sectors is encouraging.
“Despite the evident challenges for the retail market we continue to support a wide range of property deals and see firm demand from investors for quality assets.”