Reports from leading Belfast agents suggest the commercial sector in Belfast and across the province is enjoying its most active period for years.
Lambert Smith Hampton (LSH) compiled the first report for the first half of the year which states that office market activity in the city is set to surpass the average take-up level over the last decade with 100,000 sq. ft. of space currently under offer.
The second report from Lisney reflects on the second quarter of 2017 and forecasts that commercial activity is set to surpass £300 million throughout the year as a whole despite the economic climate – uncertainty surrounding Brexit.
Among a wave of announcements concerning plans for the new Grade A office accommodation, the report from LSH highlights that Grade A stock led deals throughout the first half of 2017. These deals accounted for 86% of all market activity.
Availability has risen by 56% to approximately 982,000 sq. ft, enhanced by the looming completion of a number of development and refurbishment projects.
Yet, it highlights that at 167,568 sq. ft, take-up in H1 2017 fell by 20% on the previous six months and 28 % on H1 2016.
Throughout the past twelve months, the report says demand was led by public sector and professional services occupiers who accounted for over half of the take-up (61.8%). Public sector occupiers included HMRC (104,220 sq.ft.) and Tourism NI (17,649 sq.ft).Professional services occupiers included KPMG (39,374 sq. ft.) and Axiom (26,100 sq. ft.)
815,000 sq. ft of speculative development is expected to start in the next year. These include One Bankmore Square (250,000 sq. ft), Bedford Square (215,000 sq. ft.) and The Paper Exchange (200,000 sq. ft.) it is believed there is now 1.8m sq ft. of planning approval office space and 641,000 sq. ft. with planning applications pending.
“Despite the climate of uncertainty, the outlook for the Belfast office market is positive,” believes Stuart Draffin, head of agency at Lambert Smith Hampton Belfast.
“Healthy demand exists among occupiers, and there has been a welcome improvement in quality supply and speculative development. With an additional 100,000 sq. ft. of office space agreed and some of the lowest occupational costs in the UK and Ireland, we forecast that 2017 take-up will exceed the 10-year average and total circa 300,000 sq. ft.”
The Q2 report from Lisney found a “pausing effect” from the General Election, but continues that transaction numbers are expected to rise significantly with the £125m purchase of Belfast’s Castlecourt Shopping Centre by Wirefox completing in the third quarter, a major factor in this rise.
The report continues that office take up in the second quarter was an improvement on the first quarter of the year, reaching 43,000 sq. ft, however, they also mention that unsatisfied demand is between 400,000 sq. ft. and 500,000 sq. ft.
Regarding the retail sector, Lisney highlights an increase in activity throughout the second quarter in the areas with significant new letting in Bangor, Ballymena, Coleraine, Derry, Enniskillen and Newry.
“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,” MD Declan Flynn states.
“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.
“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.”