Overall occupier and investor demand for commercial property continues to decline in Northern Ireland, falling as its fastest rate in three years, according to a surveyors’ report.
The industrial sector is still outperforming both office and retail space regionally, but pressures on the retail sector seem to have eased marginally, the latest Royal Institution of Chartered Surveyors (Rics) commercial property monitor says.
And while property professionals say they remain cautious on the three-month and 12-month horizon, their optimism is less-so than seen previously.
Overall occupier demand for commercial property in Northern Ireland fell at its sharpest rate since mid-2021, the monitor says, but the outlook for the industrial sector remains strong.
Garrett O’Hare, Rics’ NI commercial property spokesman and managing director of Bradley NI, says: “With inflation having cooled, Stormont back up and running, and a new UK government in place, there is a quiet sense of optimism in the market despite the continued challenges of increased cost of raw materials, planning delays and infrastructure issues.
“We’ve seen a real change in shopping habits, and conditions are very different compared to a few years ago.
“But there are still opportunities for commercial retail property with some optimism in shopping centre transactions over the last 12 months.”
He added: “In terms of industrial, there is a still a huge gap between supply and demand which continues to put upward pressure on values, and we are seeing an increasing number of projects starting onsite as manufacturing businesses build on their successes.”
On the wider UK picture, Rics senior economist Tarrant Parsons said: “Overall activity remains relatively subdued across the UK commercial property market, with conditions seen as generally flat in the second quarter. That said, respondents now feel the market is moving towards the early stages of an upturn following a challenging couple of years.
“The near-term path for monetary policy will be key to the outlook for CRE (commercial real estate) investment going forward, although hopes of an immediate easing in lending rates may be optimistic given still sticky services inflation, even if the headline rate has returned to target.”
