Demand from occupiers for commercial property fell at its sharpest rate in three years during the second quarter of 2024, a report said today.
But the Royal Institution of Chartered Surveyors (RICS) report said the outlook for industrial space remains strong, as it was continuing to outperform both retail and office space.
Its commercial property monitor said occupier demand was at its lowest since the second half of 2021.
But while office and retail space were both in decline, some of the pressure on retail had eased.
And demand in the industrial sector was flat during the second quarter.
Overall demand from investors was steady, though there had been an increase in investment enquiries for industrial space.
But demand for office and retail space from investors had declined, with retail reporting a steeper decline.
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The fall in demand for retail comes as two retailers, Tessuti and Craghoppers, hold closing down sales at Victoria Square shopping centre in Belfast. Fashion retailer H&M has recently shut its store in the centre, as it has relocated to Castle Lane in the city centre.
Retailer Ted Baker is also set to close its store in the centre, and its other units around the UK, after going into administration in March.
Garrett O’Hare, RICS NI commercial property spokesperson and managing director of commercial agency Bradley NI in Newry, said: “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.
“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.”
Tarrant Parsons, RICS senior economist, said: “Overall activity remains relatively subdued across the UK commercial property market, with conditions seen as generally flat in Q2.
“That said, respondents now feel the market is moving towards the early stages of an upturn following a challenging couple of years.”