Belfast prime office rates reach £20 for first time
OFFICE rental rates in Belfast have reached £20 per square foot for the first time.
The milestone level was reached in new lease terms at American insurance firm Allstate's offices at Lanyon Place.
Rental rates in the city had been languishing at around £15.50 per sq ft but were already pushing upwards.
The low rates had been considered a block on new investment in top-class office accommodation in Belfast.
The building has been occupied by Allstate since it was completed in 2000.
It has agreed with landlord Kilmona Holdings to remain as tenants until at least 2018.
The building currently offers 150,000 sq ft of space over six storeys but a planned refurbishment will see an additional 77,000 sq ft of space over seven storeys.
Speaking from the MIPIM property exhibition in Cannes, France where Kilmona is a main sponsor of the Belfast pavilion, Kilmona managing director Patrick Kearney said it was "a very important breakthrough in the Belfast office market".
Mr Kearney said it "reflects a number of factors including the rising level of high quality inward and indigenous investment in the city and the rapidly improving quality of our Grade A office space".
"Allstate will be moving to its own city centre base in a few years' time but we have no fears about re-letting this building then and indeed we are in the process of a submitting a planning application which will almost double its size," he said.
"We also have a further 400,000 sq ft of proposed Grade A office space for Belfast city centre in planning at the moment reflecting a £200m plus investment in the city and also reflecting our very positive view of the future prospects for Belfast.”
The new terms were negotiated by Causeway Asset Management. Its director Damian Mitchell said the rate "will become the accepted norm for prime office space in Belfast city centre as our economy continues to grow and the corporation tax cut comes into play from 2018".
“Interest in Belfast is increasing and as rents break into the region of £20 per sq ft developers can now financially justify the creation of high quality offices," he said.
Stuart Draffin, head of agency in Lambert Smith Hampton's Belfast office which advised on the deal said it indicated "major companies are prepared to pay to be in the right location".
"In Belfast, prime office rents have been stuck at below £16 per sq. ft for several years, a level which has held back progress on new sites by private property developers. Achieving a £20 per sq ft rental agreement on a prime office site such as 9 Lanyon Place for Kilmona Holdings sends an important signal to developers that these new build developments could now be viable."