THE struggling retail sector in the north has fuelled a decline in demand within the north's commercial property market, a new report shows.
The latest RICS and Ulster Bank quarterly survey shows occupier demand was lower in the last three months than at the start of the year.
The performance was driven by the ongoing slump in demand for retail space, which has now fallen for a sixth successive quarter.
Added to this, interest in industrial space weakened in the last quarter, following a spike in the previous six months. Those behind the report believe this is likely linked to a reduction in Brexit stockpiling from local manufacturers.
In relation to office space, demand continues to increase, but at a slower level than what was recorded at the beginning of the year. Anecdotally, surveyors noted the ongoing political uncertainty, namely Brexit and the absence of a devolved government, as key factors.
With regard to the investment market, surveyors have reported a slowdown in demand during the last quarter, with demand for office space decelerating markedly - though still rising - enquiries from investors for industrial space flat, and a negative picture regarding enquiries from investors for retail space.
Looking ahead the outlook for the overall commercial market in the north remains subdued, with rent expectations flat for the next three months.
The picture is slightly better for office and industrial rents, both forecast to rise modestly, but retail rents are expected to continue on a downward spiral.
Expectations for capital values are muted overall, with a flat outlook regarding the three months ahead, largely driven by the pessimism in the retail sector.
Brian Henning, chair of RICS in Northern Ireland, believes the latest data highlights the impact of political uncertainty on the local market.
“Overall, the findings point to a more subdued picture for the commercial property market in Northern Ireland in Q2 than in Q1, but this is primarily driven by the retail sector, with a picture brighter for the office and industrial sectors," he said
"However, they too are less positive than they were; and whilst there are some sector-specific factors at play, it appears that the uncertainty politically and economically is being felt.”
Gary Barr, relationship director for commercial real estate at Ulster Bank said it was not all doom and gloom in the local market
“As we pass the halfway mark in 2019, overall it appears to have been a relatively positive six months in the office and industrial sectors, with good demand from occupiers, particularly in the early part of the year."
"In the investment market, some potential investors may be taking a wait and see approach, but deals continue to be done by a range of buyers for good assets," he added.
