Occupier demand for commercial property rises

However, the report produced by the Royal Institution of Chartered Surveyors (RICS) and Ulster Bank shows overall demand for commercial premises in the province remains positive, 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 enquiries in the retail sector fell.

The net balance of respondents reported an increase in overall foreign investment enquiries for the first time in two years although this is coming off a low base. The office and retail sectors saw increased interest from foreign investors, but industrial premises saw a fall.

Expectations for capital values strengthened overall over the next three months and, although retail capital value expectations have fallen for the next quarter, for the 12 months ahead they are positive.

“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,” said RICS NI commercial property spokesperson, Tracy Flannigan.

“This is exacerbated by the demise of Toys R Us and New Look’s company voluntary arrangement.

“Although short term expectations for capital values in the retail sector have fallen respondents hope to see these pick up later in the next year.”

“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.”

Gary Barr, of Ulster Bank said: “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.”