Northern Ireland’s office and industrial commercial sectors appear to be the only bright spots in an otherwise gloomy picture according to the latest data from the Royal Institution of Chartered Surveyors (RICS).
Produced with Ulster Bank, the Commercial Market Survey for the third quarter of the year indicates a decrease in overall occupier demand as retail continues to face significant challenges.
The balance of respondents reporting a decrease in occupier and investor demand for retail space rose for the third quarter in a row.
In addition, more respondents also expect that retail rents and capital values will be lower again in three months’ time.
In terms of the office sector, the survey’s demand indicator slipped into negative territory for the first time in nearly six years, but the outlook is stronger, with both three-month rent and capital value expectations remaining in positive territory. The 12-month picture is also encouraging with rental expectations firmly in positive territory.
A flat occupier demand reading was recorded for industrial premises but three-month rent and capital value expectations were positive and the 12 month outlook for rent expectations is also relatively upbeat.
For the first time respondents were asked two questions specifically about Brexit, with 42% of local respondents citing evidence of firms looking to relocate away from the UK in response to Brexit, compared with the UK average of 25 percent.
Just over 60% said that they expected to see an increase in firms relocating over the next two years, compared with 48% in other parts of the UK.
“On the face of it retail continues to face a really challenging period, and that won’t be helped in Belfast by the situation created by the fire at Bank Buildings,” said RICS NI chair Brian Henning.
“The picture for the office and industrial sectors continues to be more positive, with surveyors relatively confident about the outlook. However, political and Brexit uncertainty are real concerns which are impacting on pricing.”
Gary Barr, relationship director at Ulster Bank said: “Despite the challenges retail is facing, the performance of office and industrial sectors is more encouraging, and the outlook for these sectors is relatively positive.”