Northern Ireland’s commercial property market is continuing to wane, with occupier demand for both retail and office space muted, the latest industry report from the Royal Institute of Chartered Surveyors.
Its quarterly Commercial Property Monitor for the three months to the end of 2023, which garners the opinions of surveyors, found a market which is “sluggish and lacking momentum”.
The increasing cost of finance as a result of higher interest rates and elevated build costs are said to be continuing to hamper the market, although there is some cheer to be found in the fact the rate of decline in demand from both the office and retail sector is declining.
Additionally, the industrial sector, which includes warehouses and factory buildings, has witnessed an uplift in demand.
However, with overall demand from occupiers and investors alike subdued, the outlook for both rents and capital value of commercial property is weak.
Garrett O’Hare, RICS NI spokesman and Managing Director of Bradley NI, said there is at least some demand in the industrial sector.
“2023 was a turbulent year in the commercial property sector. Increased finance and build costs placed further pressure on new development, as well as, redevelopment and value add opportunities in existing schemes,” he said. “Demand remains high in the industrial sector, however, anecdotally we’re seeing that transaction volumes were lower than in 2022 largely due to a lack of supply of both secondary property and zoned land for new development.
He said the region’s unique position offers some hope for the future.
“Northern Ireland is regarded as a gateway to both European and global markets, which has attracted significant inward investment over the course of the last 24 months from export businesses seeking to capitalise on the unique opportunities presented in the region. The office market remains challenging with relatively low transaction volumes as companies continue to evolve and reshape on the back of the cultural changes brought about on the back of Covid-19. However, generally, investors remain ready for strong covenant-led opportunities where lease terms present a favourable and long-term return.”