Business

Commercial property activity 'will increase in final quarter'

Damolly retail park in Newry, which sold recently for more than £30 million
Damolly retail park in Newry, which sold recently for more than £30 million Damolly retail park in Newry, which sold recently for more than £30 million

ACTIVITY in the north's commercial property sector is expected to increase between now and January, according to the latest industry barometer from Belfast-based agents CBRE.

Indeed it is predicting that up to £100 million more of investment transactions will be signed off between now and year-end.

But activity will still be way behind where it was in 2015, the report says.

The Brexit referendum result is said to have dampened appetite for investment opportunities and changed the buyer profile from mostly UK institutions to more local high net worth individuals and UK property companies.

In total, £164.4m has been invested in 23 transactions during the first nine months of 2016 – that compares more than £400m invested in 43 transactions last year. In addition to a dampened appetite, this is due to smaller lot sizes being on the market compared to 2015.

But the latter half of 2016 has still seen high-value investment deals, with Damolly Retail Park sold for £30.75m and Tower Centre in Ballymena for in the region of £6m/£7m.

CBRE managing director Brian Lavery said: “Despite uncertainty in light of the June referendum, the commercial property market remains remarkably resilient.

"We expect to see up to £100 million of transactions in the remaining months with assets such as Curry’s Sprucefield guiding £14 million, Laharna Retail Park in Larne guiding £5.78 million and two office buildings at Clarendon Dock guiding £4.5 million.”

Office lettings have been steady, with 310,000 sq ft recorded in Belfast in the first three quarters of 2016. A recent letting of note was the 15,400 sq ft to Pearson Management Services at Millenium House on Great Victoria Street. Prime rents have now climbed to £18 per sq ft.

He added: “Activity in the occupational markets has been strong regardless of the UK economic backdrop – with office, industrial and retail occupier transactions continuing to be recorded and signs of rental growth evident in recent months.

"With Grade A space still scarce, refurbishment programmes will become more prominent as most space requirements in the market remain active despite the Brexit uncertainty.

“The focus for the last two months of 2016 will be to get outstanding transactions completed by year-end.

"But there is no doubt Brexit will continue to be a major topic for discussion in Northern Ireland throughout 2017 along with the UK’s proposed plan to reduce corporation tax to 10 per cent.”