The estimate was revealed as Lisney published the findings of its report into the second quarter of 2017, during which it said the market had sustained a “pausing effect” due to the UK General Election.
However, the report found transaction volumes are expected to increase significantly with the £125m purchase of CastleCourt Shopping Centre by Wirefox completing in the third quarter, a major contributory factor.
The report also found that office take up from April-June improved on the first quarter, reaching 43,000 sq ft, but added that unsatisfied demand is now between 400,000 and 500,000 sq ft.
In the retail sector, Lisney said the second quarter was marked by more activity in the regions with significant new lettings in Enniskillen, Coleraine, Bangor, Ballymena, Newry and Derry.
Lisney said that overall, 2017 is expected to provide greater investment volumes than the £215m transacted last year, but added that demand could be dampened as consumer spending shows signs of slowing down.
Headline findings from the report reveal that:
- Investment volumes during the second quarter of 2017 reached £18m, with a further £200m+ currently under offer or in legals and £69m currently on the market.
- The most notable transaction during the second quarter was Wirefox’s £125m purchase of CastleCourt Shopping Centre in Belfast.
- The take-up of office space amounted to 43,000 sq ft during the second quarter, with headline rents expected to stabilise between £20 and £22 per sq ft.
- Retail vacancy rates in Belfast city are expected to fall below 10%, pushing prime rents to between £135 and £150 per sq ft.
- Renewed interest in industrial occupation and investment, given export focus and improved profitability due to fall in value of sterling.
“Overall transaction levels in the Northern Ireland commercial property market are expected to rise significantly in 2017 compared to last year and we are seeing continued demand particularly for investment stock.
“Subdued investment volumes over the first half of the year were as anticipated in the context of the General Election while its pausing effect was amplified due to the wider macro political climate.
Examining the performance of the local office, retail and industrial property markets in the second quarter of 2017, Mr Flynn added:
“There are positive signs ahead for the local office market in the third quarter and beyond, attributable to unsatisfied demand, continued inward investment and new market entrants, particularly within the creative industries sector.
“Given the levels of demand, there is now a greater emphasis on delivering refurbishment projects swiftly and pushing speculative new build schemes through planning without undue delay.
“On the supply side, the commencement of groundworks at Chichester Street on behalf of Orby Developments is another positive move.
“In retail, the effect that Brexit uncertainty is having on consumer confidence is a real worry for retailers but border towns are benefiting from the strengthening of the euro against the pound..
“Vacancy rates in Belfast are at an all-time low and we expect a major announcement over the coming months on a new occupant for the former BHS store on Castle Lane.
“Speculative construction meanwhile, is still not a viable option for developers in the industrial sector, resulting in a number of owner occupiers constructing their own premises.”
Lisney’s latest report on the Northern Ireland commercial property market can be viewed in full here: https://www.lisney.com/research/publications-ni/.