Belfast office space rental costs are rising almost three times faster than the UK average, according to a new report.
And the increase in rent within the commercial property market means new developments in Belfast are more feasible than they have been in the last eight years, according to Lambert Smith Hampton.
It said the onus is now on council planning departments to move forward quickly on decisions for suitable projects that will increase the supply of grade A office space.
Lambert Smith Hampton has said the demand for grade A office space now stands in excess of 500,000 sq ft in Belfast. The supply of prime office space was down significantly, with availability falling by around 19% each year.
A number of new buildings have been constructed to meet growing demand, while several others have been completed.
City Quays on the Belfast Harbour estate already houses firms including law giant Baker & McKenzie and US technology firm Cayan. And work is due to start on City Quays 2 office development, with a third also planned.
According to Lambert Smith Hampton’s National Office Market report for this year, Belfast showed the third biggest rental increase in the UK, increasing by 17% by the end of 2015. That compares with a UK average of just 6%. The firm said Belfast reached a rental price of £17 per sq ft, up from £14.50 last year.
Prime rents are expected to reach at least £18.50 per sq ft by the end of 2016. But it still is some way off more expensive office developments elsewhere, including prime rental rates of £32.50 per sq ft in Edinburgh and £34 per sq ft in Manchester city centre.
Stuart Draffin, director at Lambert Smith Hampton in Belfast, said: “This report provides encouragement that the market is improving, with prime rents up 17% in Belfast last year.
“This reflects a robust confidence amongst occupiers, but still keeps pressure on the supply level. With the rental market rising, banks are willing to lend again and other investors are also entering the market.
“That means the pressure to help get new grade A office space off the ground is now being felt by planners and local councils.”
A number of office developments are currently on the market, including Riverside House in Armagh, offering a stand-alone office building, with 2,870 sq ft of space for sale by Osborne King.