NEW Belfast office developments have driven crane numbers in the sector to the highest level in a decade, according to a new report.
Lambert Smith Hampton's latest half-year market analysis reveals healthy demand for high quality office space after a stellar 2018. However, in comparison to last year, office take-up was significantly less in the first six months of 2019. The 181,970 sq ft take-up in the first half of the year by two-thirds less (66 per cent) than the same period in 2018 and a third down (34 per cent) on the five-year average.
However there are grounds for optimism with two multi-million pound new office deals for Deloitte and Kainos in Belfast city centre still to be signed and added to the figures.
The three largest deals recorded in the first half of 2019 were at buildings undergoing major refurbishment. PwC leased a further 46,000 sq ft at Merchant Square, taking the remainder of the available space at their new 201,000 q ft Belfast headquarters, an undisclosed serviced office/co-working business pre-let 31,969 sq ft at Eagle Star House and Neueda leased the West Tower at Lanyon Plaza (29,220 sq ft).
In the same period office space availability increased by 15 per cent from the end of 2018, although a significant amount of this space is not ready for immediate occupation. At 752,757 sq ft, current availability is tight, equivalent to one and a half years of supply based on average take-up.
Citibank’s purchase of their Belfast HQ, the Gateway Office in the Titanic Quarter, for around £34m was the largest single deal since the third quarter of 2017.
Other major deals completed included the purchase of Timber Quay in Derry by a local investor for £5.3m and another local investor's acquisition of 15-17 Chichester Street in Belfast for £1.4m.
Lambert Smith Hampton associate director, Greg Henry said there are positive signs in the local market.
"Current construction of new and refurbished offices has peaked at 1.3m sq ft, of which two-thirds is speculative," he said.
"Supply has been boosted by the commencement of the currently under construction Mercantile (73,000 sq ft) on Donegall Square South and the high quality refurbishment of the 37,000 sq ft The Kelvin (Stokes House) on College Square East, both due for completion in mid-2020."
“The Ewart at Bedford Square (215,000 sq ft) scheduled to complete in 2021 is partially (100,000 sq ft) pre-let to Deloitte," Mr Henry said
“In a joint venture between Titanic Quarter Ltd and Belfast Harbour, enabling works commenced on Olympic House (150,000 sq ft) in June 2019. Belfast Harbour also commenced City Quays 3 (180,000 sq ft) in May 2019. Both buildings are scheduled to complete in 2021.”
“A raft of both new build and refurbishment developments are set to deliver good quality schemes to further replenish the market and drive the prime headline rent to a new high. However, with much of this stock scheduled to be delivered from 2020, take-up for 2019 is expected to be more in keeping with the five-year average trend," he added.
Belfast’s prime headline rent currently stands at £23 per sq ft, with the delivery of new build and refurbished space set to continue to promote steady rental growth and is forecast to push the rate up to £24 by the end of this year.
