Retail property demand in Northern Ireland drops but positive signs for commercial market
Demand has fallen for retail property in Northern Ireland as pressures on the sector grow, according to a survey today.
The findings of the Royal Institution of Chartered Surveyors and Ulster Bank Commercial Market Survey come as the number of store closures grow around the province.
But there are some positives reported in the survey, including the first growth in interest from foreign investors for two years.
However, retail was a poor performer with demand for premises down.
A large number of UK retailers have closed stores in recent months.
In Ballymena, three high street clothing chains - Evans, Monsoon and Miss Selfridge - have pulled down the shutters in Fairhill shopping centre, while furniture store Uno on Belfast's Boucher Road is closing.
The administrators of electrical chain Maplin have said they will start closing its stores - there are four in Northern Ireland - while four Toys R Us shops in the province have also shut after its collapse.
And low-cost fashion chain New Look has entered a Company Voluntary Arrangement (CVA) - resulting in the company negotiating rent reductions in some of its stores in Northern Ireland.
But today's survey said overall demand for commercial premises was still strong, with industrial and office space still sought after.
Tracy Flannigan, a director at commercial property agency CBRE, said: "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.
"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."
But the outlook was brighter for the office market, she added.
"The 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," Ms Flannigan added.
The survey also found growing hopes for rent rises in the industrial and office sectors. Interest from investors in office and industrial premises was also up, although inquiries about retail opportunities were down.
Respondents reported the first rise in overall foreign investment interest in two years, but the survey added the increase was coming from a low base.
The office and retail sectors saw increased interest from foreign investors, but industrial premises saw a fall.
Gary Barr, relationship director for commercial real estate at 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."
Meanwhile, administrators have said they are likely to start closing Maplin stores due to lack of viable interest in the business.
It fell into administration in March, putting around 2,500 jobs at risk, with the business falling into the care of PwC. It's understood one secured creditor is owed just over £100m.