22 January 2015

Confidence Returns as Vacancy Rates Fall


The 2014 Northern Ireland Commercial Property Report has revealed that retail vacancy rates across towns and cities have fallen to 17.7% in 2014 from 19.1% the previous year.

The report, published today by leading commercial property agents Lisney, is the most comprehensive and longest established study of the commercial property market in Northern Ireland across investments, retail, office and industrial sectors.

Headline results indicate:

– A continuing lack of Grade A office availability in Belfast
– Retail vacancy rates still lag behind the rest of the UK
– Competitive bidding returns to a busy investment market
– Industrial vacancy rates fall but a lack of larger building is evident

Declan Flynn, Managing Director of Lisney Northern Ireland which specialises in office, retail, leisure and industrial property acquisition, disposal and investment, commented:

“This is the fourth year of our Northern Ireland Commercial Property Report which is widely regarded as the true barometer of the sector in Northern Ireland.

“This year’s findings highlight a return of confidence across all sectors, with retail vacancy rates falling, investments in 2014 five times the transaction values of 2012 and strong demand for office accommodation likely to witness rents rise in 2015.

“The long awaited rates re-valuation will see retail vacancies drop further and the availability of new finance and in many cases new capital will see construction rise significantly.

“Whilst there are issues around the lack of Grade A, the optimism in the market is evident and this will fuel growth across all sectors in 2015.”

The principal findings of Lisney’s 2014 Northern Ireland Commercial Property Report highlight:


– Grade A office availability is 265,500 sq.ft this up from 251,000 sq. ft in 2013 due to the inclusion of City Quays and space released when Government departments moved to Lanyon Place.
– This lack of Grade A availability will continue throughout 2015 due to few new developments entering the market, as such Grade A rents will increase further.
– If we want to attract more international companies and high level jobs it is imperative that new buildings are constructed
– There is a resurgence of interest in development sites which have seen little interest since 2007 – we expect new construction will commence in the next 12-18 months.
– The majority of office lettings in 2014 are private sector, which is a reversal of previous years. Only 13% of the deals originated from the public sector.

Notable Letting Deals in 2014
Concentrix 36,000 sq. ft Contentrix House
Baker McKenzie 28,000 sq. ft City Quays
SSE 17,000 sq. ft Millennium House
Alexander Mann 17,000 sq. ft Millennium House
Citi 15,600 sq, ft Gateway Building


Retail vacancy levels in Northern have decreased from 19.1% in 2013 to 17.7% in 2014, this follows a detailed study of 17 towns and cities across Northern Ireland.
– While a 1.4% reduction is good news for retailers, landlords and consumers, Northern Ireland is still lagging behind the rest of the UK.

Average UK Vacancy Rates
UK 10.3%
Wales 14.2%
Scotland 9.1%

– Prime retail vacancy rates are holding steady at 17.1% vacancy with improvement being held back due to prohibitive business rates. The imminent rates re-evalution should be the catalyst for significant improvement throughout 2015.
– The impact of continued activity in the shopping centre investment market will see new owners invest in redevelopment to attract anchor tenants breathing life into centres which have not seen capital investments in many years.
– In town secondary locations (areas outside the main streets in each location) have seen the biggest improvement with vacancies falling from 22.1% in 2013 to 18.8% in 2014. This is due to start-up or pop-up retail businesses taking advantage of a low cost base and landlord incentives.


– Direct Property investment volumes in Northern Ireland totalled £400 million in 2014 a 77% increase on the previous year. This figure does not take into account the various loan sales throughout the year. One of the primary drivers is increasing confidence in the retail and office sectors.

Property Investments Volumes in Northern Ireland
2012 £75 million
2013 £175 million
2014 £400 million

– There has been an influx of new investors such as M&G, Marathon Asset Management, F&C Reit
– Competitive bidding by investors has resulted in the erosion of the traditional yield gap to a point where prime properties in Northern Ireland are trading on a par to similar assets in the UK.
– However purchasers of the loan books in 2014 are likely to be the key sellers in 2015. This will be welcomed as demand is far outstripping supply.


– For the third year vacancy rates have decreased and now stand at 12% compared to 13 %in 2013 and 16% in 2012. This is lower than the current average in Dublin of 20% but the UK average is 9.7%.
– Inward investment and expansion of local companies remains limited due to the shortage of larger buildings.
– New entrants have included Screwfix which has had an aggressive acquisition strategy with 18 locations targeted
– Other notable deals include the sale of Massereene Barracks in Antrim to Randox.
– Corporation Tax will be a game changer for the Industrial sector especially stimulating demand and inward investment.

Declan Flynn, Managing Director, continued:

“The outlook for 2015 across all sectors remains strong with confidence returning and the rates revaluation set to drive the retail sector further and drive vacancies rates down.

“The lack of Grade A office is still a concern but we do expect rents to increase in 2015 as the market continues its recovery.

“This increasing confidence in retail and office sectors will sustain an appetite from investors.

“By the end of 2015 we expect the cranes to have re-appeared Belfast’s skyline as construction on development sites begins which will be welcomed by many sectors of the economy across Northern Ireland.”

View the reports here:

Lisney Northern Ireland – Industrial 2014
Lisney Northern Ireland – Investment 2014
Lisney Northern Ireland – Office 2014
Lisney Northern Ireland – Reatil 2014

Caption: Declan Flynn, Linsey

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