The final quarter of 2017 was the strongest for the Belfast office market in two years. The growth brought last year’s total take-up office space to 430,290 sq.ft.
According to Savills Northern Ireland, 2017 was the second year in a row – post Brexit – of strong growth, with levels reflecting the peak of 2007. Rentals are approximately 50% higher. However, Savills highlight that the real prime rent has not yet been tested because of a lack of new stock.
The vacancy rate now stands at 7.2% with Grade A vacancy at 7.1%.
Savills Northern Ireland predict more pre-lets this year with larger occupiers obtaining their desired buildings. In order for the industry to continue meeting local and overseas demand, speculative development will need to begin in the city centre.
A significant transaction in 2017 was the HMRC pre-letting 104,220 sq. ft at Erskine House on Belfast’s Chichester Street. Technology, Media & Telecommunications (TMT) remained the most active sector, accounting for 33% of overall take-up.
After impressive rental growth in 2015 and 2016 of over 25%, last year’s prime rents witnessed 2016’s level of £21.50 per sq.ft. Demand in 2017 was largely met due to the delivery of refurbished space.
These refurbished spaces usually provide occupiers with an improved specification in an older building with discounted rent from new developments.
Divisional Director of Savills Northern Ireland, Simon McEvoy, highlighted: “It is great that we have a pipeline of refurbishment projects to help meet immediate demand, however if Belfast is to continue to attract global firms that are fighting to retain and attract employees, then we need to deliver the next generation spaces, replacing tired, old and uninspiring accommodation with modern office buildings that provide plenty of amenity.”