10 July 2022 News
Activity in Northern Ireland’s commercial property market has been busy in the second quarter of the year as investors look for value and long-term investment opportunities, priming the market for a busy second half, according to CBRE NI’s Quarterly Real Estate Research Report.
It recorded £44 million worth of transactions in the three months to the end of June 2022, an increase of £21 million on the same period last year.
The most notable deals to have completed in the second quarter include the sale of Ross's Court for £5.7 million and Marlborough House for an undisclosed price (both located in Belfast) to the Martin Property Group. In addition, Killymeal House in Belfast sold for £6.1 million.
By the end of the second quarter, the largest investment sector so far this year has been retail followed by the office sector representing 63% and 30% of the total investment spend respectively.
CBRE NI Managing Director Brian Lavery, said: “Despite a number of headwinds, the Northern Ireland commercial property market has been busy over the last three months. The second half of the year will certainly be interesting, but the commercial property market can continue to be an indication of recovering investment and occupational interest in what has always been a resilient sector.
“Commercial property is often used as a hedge against inflation, and this will give the investment market a boost as inflationary pressures continue to rise across the UK and Ireland,” he added.
“This is proven by the investment market activity in Northern Ireland and indeed the preparation for sale of several substantial assets which will come to the market in the third quarter.”
CBRE NI said Q3 in 2022 looks set to be particularly busy for the investment market with over £40 million-worth of properties agreed for sale and in the process of being finalised as well as over £115 million being prepared for the market.
Meanwhile, lettings across offices, retail, industrial and hotels have remained active over the second quarter of 2022, although the inflationary pressures which have benefited the investment market have dented occupier sentiment, as have geopolitical uncertainty around Ukraine and the Northern Ireland Protocol.
In the office market, Belfast city centre recorded take-up of 77,610 square feet, an increase of 214% over the first quarter of the year which brings the year-to-date figure to 102,289 square feet. Take-up is still below the rolling five-year average but the recent announcement removing the need to work from home where possible is expected to assist companies in working out their real estate strategies as the majority look to implement a hybrid strategy between home and office-based working.
Demand for industrial and logistics space remains strong, with a lack of accommodation tempering activity. Countering that demand is the beginning of speculative development of warehouse space, as exampled in Duncrue Street, Belfast, where approximately 100,000 square feet of space is due for completion in August/September 2022.
In retail, Q2 has continued to witness further openings, although inflationary and labour costs have resulted in a number of announced closures, particularly for local food and beverage-based retailers. The retail warehouse sector continues to remain resilient with discount retailers such as Home Bargains, B&M and Poundland looking for further new store opportunities.
The report also said the Northern Ireland hotel market is in a confident place as it enters the traditional busy summer period. Leisure demand has increased month-on-month in 2022, benefitting from the return of some international visitors in recent weeks as well as corporate guests. Large scale events have also started and are expected to return to more normal levels as the year progresses.