Retail and Hospitality sectors performing strongly amid subdued start to 2025 for NI Commercial Property Market
7th Apr 2025
Northern Ireland’s retail and hospitality sectors have made a robust start to 2025 amid what has been a mixed opening quarter across the commercial real estate market, CBRE NI’s latest research has shown.
The leading commercial property agent’s Market Report for the first quarter of 2025 revealed increased footfall, heightened leasing activity, and renewed interest from major brands as key factors boosting confidence in the retail market.
In Belfast city centre in particular, footfall is up by 4.8% on the same period in the previous year, and Donegall Place is nearing full occupancy on its units.
Prime shopping centres continue to outperform secondary schemes, while the retail warehouse market remains strong with high demand and low vacancy levels. The food and beverage sector is also thriving, with operators such as Starbucks and McDonald’s actively seeking new opportunities.
Commenting on the findings, Brian Lavery, Managing Director at CBRE NI, said:
“Our Q1 2025 report paints a picture of a market in transition, with resilience in certain sectors and ongoing challenges in others. The retail sector has been the best performer, with increased footfall and strong demand from both new and existing brands.
“This positive momentum is a sign of growing confidence in Belfast as a key destination for retail investment.”
The hotel sector saw significant activity throughout the quarter, with major transactions and new developments shaping the landscape. The McKeever Hotel Group expanded its portfolio with the acquisition of the Armagh City Hotel, while Andras House acquired the 90-bedroom Travelodge Belfast for £8.75 million.
Additionally, the 175-bedroom room2 Belfast aparthotel was listed for sale at £21.2 million, and Hilton announced plans to introduce its Tempo brand to Belfast, marking its first international location outside the US.
Beyond retail, the broader commercial property landscape recorded a varied performance across different sectors. The office market saw a total take-up of 57,792 sq ft across 11 deals in Q1 2025, with a notable 15,750 sq ft letting at Millennium House. While this represented an overall drop of 42% compared to Q1 2024, best-in-class office rents have remained steady at £25.50 per sq ft.
Investment activity has been muted at just under £36 million for the quarter, but is showing signs of recovery. The industrial investment sector led the way, accounting for nearly 70% of total investment spend, followed by alternative assets (24%) and retail (6%).
Private equity investors were particularly active, representing 64% of total investment. Encouragingly, the pipeline for 2025 looks healthier, with £63 million worth of new sales launched in Q1 alone – almost double the £36 million introduced in the same period last year.
Mr Lavery added:
“The office market, though experiencing a slow start to the year, remains steady in prime locations, with occupiers carefully considering their long-term space requirements.
“The investment market is gradually recovering and, while transaction volumes remain subdued, the increased level of new sales launched in Q1 is an encouraging sign. However, the high cost of borrowing continues to be a limiting factor, and investors remain selective about opportunities.
“The hotel sector, on the other hand, continues to be highly active, with significant transactions and new developments reinforcing Belfast’s position as an attractive destination for both business and leisure tourism.
“Overall, we are cautiously optimistic about the months ahead. The strength of the retail and hotel sectors, combined with improving investor sentiment, indicates that Northern Ireland’s commercial property market is poised for further recovery, albeit in a challenging and fast-changing world economy.”
The full CBRE NI research report can be viewed here.
