THE north's commercial property market ended the year with a much needed boost with the sales of Sprucefield retail park in Lisburn by Intu and Crescent Link Retail in Derry by the Lotus Group.
The combined value of these deals, at £70 million, brought the total value of commercial property investments in Northern Ireland for 2019 to just over £210m.
Property investment at this level is a considerable improvement on levels seen in 2018 at £165m, though there is a long way to go to reach the five-year average at just over £300m a year.
The subdued level of investment in 2019 is not surprising given the uncertainty around Brexit over the last few years, and we would expect investment levels to bounce back strongly this year given the strong mandate the Conservative Party received in the recent general election and the relatively stable macro-economic outlook
The office sector again performed strongly in 2019 with take up of 517,000 sq ft, well ahead of the five year average. Significant deals throughout the year included the signing of leases by Deloitte for 80,000 sq ft in the Ewart Building on Bedford Street, PwC taking the remaining 46,000 sq ft in Merchant Square and the letting by Kilmona of the entirety of Chichester House on Chichester Street to Rapid 7.
The outlook for 2020 for the office sector also looks strong with stated requirements in the market in excess of 400,000 sq ft including the NI Civil Service Requirement for 161,500 sq ft and the as yet unsatisfied Citi requirement for 120,000 sq ft.
Available prime office stock is as usual fairly limited though buildings including The Sixth, Paper Exchange and The Mercantile all in prime locations could be brought on stream this year subject to suitable pre lets.
Trends in the office occupier market are set to continue with co working/serviced office providers predicted to continue their significant expansion throughout the UK.
Technology is as ever set to change the way we work though it is unlikely to affect the demand for office space in the short to medium term as office workers need to interact with each other in an easily accessible work enhancing environment.
The continuing challenges in the retail market will create opportunities both for successful retailers to relocate to better position and for investors who are prepared to look at the sector. There will be undoubtedly be a need for alternative uses for retail space in both suburban shopping centres and retail parks but also in our towns and cities given that the prime retail areas are becoming smaller.
In order for our bricks and mortar retailers to successfully continue to compete with the steady advance of the internet, our government will have to look at the level of rates charged to retailers and work out a way to balance the playing field with their internet competitors. though where this sits on the level of government priorities remains to be seen.
On balance, the outlook for 2020 is a positive one and we look forward to the challenges that the year ahead will bring.
:: Declan Flynn is managing director at Belfast-based commercial property agency Lisney, which works on behalf of many of the north's most significant investors and developers as well as major retailers and businesses.
