AS the nights draw in and the mercury plunges towards zero, Northern Ireland’s days of basking in the scorching sun throughout the summer months seem like a distant memory, if not a dream.
Whilst Northern Ireland was reaching some of the highest temperatures ever recorded in the region, activity in the local commercial property market was also heating up.
The summer ended on a high with the sale of the Metro Building on Donegall Square South. The 70,000 sq ft Grade A office asset was purchased in September by a Private Property Trust which, as a result of competitive bidding, paid well over the £21m asking price. This marks the largest deal of the year so far, which seems appropriate given activity within the market really seemed to shift up a gear over the summer months.
This sale of Metro in which Lisney acted on behalf of the seller, was preceded by the sale of 40-46 Donegall Place and Obel 68.
40-46 Donegall Place, currently home to Next and Eason, marked the first purchase in Northern Ireland and only the second in the United Kingdom for French asset managers, Corum Asset Management, which has stressed its commitment to sourcing and acquiring other opportunities throughout the UK and Europe. The £15.2m sale of Obel 68 to Belfast Harbour brought the asset back into local hands following stiff competition from a number of bidders.
Investment activity has been extremely encouraging following what was a rather uneventful start to 2018. Looking ahead I believe we can expect further bolstered investment volumes with several high profile office and retail investments being prepared for sale before the end of the year. Just last week, Lisburn’s Bow Street Mall hit the market with a price tag of £18m and Crescent Link Retail Park in Derry/Londonderry is also on the market at £40.5m.
Whilst the office market remains the most buoyant, supply is still the big problem, with no ‘new’ stock expected to be habitable until the new year. The next twelve months however will see the doors open at Chichester House, Artola House and Moneda House, all boasting newly refurbished office space.
Dark clouds continue to linger over the retail market which remains dominated by Company Voluntary Agreements (CVAs) and restructuring. Most recently, Patisserie Valerie was rocked by near-collapse having run up significant secret overdrafts. The 2,800 jobs at the struggling cake chain have since been saved, for now, with entrepreneur Luke Johnson lending the company £20m of his own money.
Whilst the commercial property market is performing reasonably well with some definite highs recorded already this year, it continues to contend with complexities such as the looming Brexit deadline and a lack of a local assembly.
A sensible approach to these obstacles will be crucial for the commercial property market to maintain its resilience and achieve its potential.
:: Declan Flynn is managing director of Belfast-based commercial property agency Lisney, which works on behalf of many of Northern Ireland's most significant investors and developers as well as major retailers and businesses.
