THE office market in Belfast maintained its healthy momentum last year after a spectacular 2018, with both new and established occupiers demonstrating confidence in the city, the latest Northern Ireland office market report from agents Lambert Smith Hampton reveals.
At 517,380 sq ft, annual take-up was closely in line with the five-year annual average, though there were fewer large deals, with the market driven by strong demand in the sub-10,000 sq ft category.
And the three largest deals were current occupiers relocating to new build or extensively refurbished buildings.
Largest deal of the year was Deloitte’s leasing of 80,000 sq ft at the Ewart, Bedford Square, with an option for an additional 35,000 sq ft.
Rapid7 will move into Chichester House (47,651 sq ft) in August while PwC leased the remaining 46,000 sq ft at Merchant Square (212,000 sq ft) to become the building’s sole occupier in the autumn.
Elsewhere, the refurbished Eagle Star House (31,969 sq ft) was leased by co-working operator UrbanHQ who hope to open an eco-friendly design-led workspace this summer.
The professional services and technology, media and telecoms (TMT) sectors emerged as the key drivers of deals and take-up in 2019, together accounting for almost three-quarters of the total.
Key TMT deals included Proofpoint’s letting of the new Laser 2 at Weaver’s Court (34,000 sq ft) and Neueda’s lease of the refurbished West Tower at Lanyon Plaza (29,220 sq ft). Dynamic Signal and Signifyd each leased 11,630 sq ft at River House.
At 466,150 sq ft, total availability has fallen to a record low and is equivalent less than a year's supply. Over 1.4 million sq ft of take-up over the past two years, coupled with a lull in speculative development and larger refurbishment schemes has severely dented supply.
While supply decreased overall between 2018 and 2019, grade A supply rose 25 per cent to 307,312 sq ft, primarily driven by refurbishment projects that commenced last year.
Available schemes currently under refurbishment with completion scheduled in the next 12 months include The Vantage on Great Victoria Street (65,000 sq ft), The Kelvin at College Square East (37,796 sq ft) and East Tower at Lanyon Plaza (41,000 sq ft).
Greg Henry, director of agency at Lambert Smith Hampton, said: “While 2019 was quieter, it was a solid year for office markets. Prime headline rents continue to push upwards, currently standing at £23 per sq ft and forecast to reach £24 by the end this year.
“Speculative development is reaching new highs, with Belfast Harbour Commissioners continuing to bring forward their vision for the docklands. They broke ground on the next phase of their mixed use waterside development, the 181,169 sq ft City Quays 3, last May.”
With the backing of US private equity firm Sculptor Capital Management, Wirefox commenced construction of the Paper Exchange on Chichester Street in February (155,133 sq ft) due for completion at end 2021. This is the first privately funded speculative build in the last decade.
Elsewhere, there are significant pipeline developments with planning permission including Building Blocks at Smithfield (115,000 sq ft), Olympic House at Titanic Quarter (150,000 sq ft), the redevelopment of Norwich Union House (170,000 sq ft) and Belfast Waterside at the former Sirocco works (250,000 sq ft).
But Mr Henry cautioned: “The Covid-19 pandemic will have an impact on both the occupier and investment market. Currently the busy start to the year continues, with the vast majority of occupier and investment deals already in legals moving forward and a healthy occupier requirements book.
“We are expecting a slowdown in activity over the coming months as the UK and Irish Governments continue to place further restrictions on the movement of people. But expect demand to bounce back in the second half of the year.”
