Prime office rent on up - but further growth required
RENT for prime office space in Belfast has risen by 19 per cent in the past year, according to the latest research.
A report by Colliers International found grade A rents to be achieving 15.50 per sq ft.
However, the city is still well behind the UK average.
Office rent rose by 6.5 per cent year on year across the UK with prime rents averaging 23.98 per sq ft and secondary at 15.51 per sq ft.
Belfast rent growth was on a similar rate to some parts of south-west England such as Gloucester which saw rents rise 18 per cent and both Bournemouth and Cheltenham by 11 per cent.
Elsewhere, Aberdeen experienced a 16 per cent increase while rates in Birmingham were up 11 per cent.
Rates for secondary stock in Belfast remained static at 8 per sq ft.
Elsewhere however, there were significant rises with the overall average up 8 per cent.
Growth was particularly strong in south-east England with rents in Wimbledon up 38 per cent, Reading up 33 per cent, Ealing up 29 per cent, Weybridge up 25 per cent and Kingston up 23 per cent.
Ian Duddy, head of business space for Colliers International in Belfast, said: The shortage of Grade A office space in Belfast has led a number of major occupiers toward developing their own headquarter office buildings and that further rental growth in the Grade A market is necessary to encourage new development in the city.
"The secondary or Grade B market did not experience the growth seen elsewhere nationally, a result of the high availability of stock in this sector in Belfast and the lack of acquisitive activity from occupiers for this type of space.
Colliers' head of national offices Mark Taylor added added: Nationally, we are seeing very little differentiation between out-of-town and in-town secondary rents in established office locations.
Some secondary market occupiers, though, are taking space on the basis that they believe they are making a cost saving per square foot compared to prime market occupiers. However, when taking into consideration service charge expenses to maintain these generally older buildings, the total cost can exceed primary stock.
The great rental growth we are seeing on the whole in the primary and secondary markets is due to significantly limited supply. Middle tier occupiers are now faced with the prospect of having to pay more to be in a better location right now or wait for the delivery of new stock. Regardless, pent up demand will exacerbate supply shortages and as a result there is a potential for double digit rental growth in certain prime locations and prime buildings