Belfast can cash in on Dublin's inflated commercial property market
In Dublin it's just like It's like the bust never happened.
An external observer would be justified in thinking it's just been one long 'boom' for the last ten years and more. Nothing reflects this as much as the cost of renting commercial space. It's an issue that offers Belfast and other cities in the North an opportunity, despite of the total lack of political leadership which we are currently experiencing and which shows no sign of coming to an end any time soon.
Just last month commercial property agents CBRE was quoting available space at €40 per square foot and some ‘prime city centre sites' have even reached €60, those are incredible figures. At the time when rents are at an all time high vacancy rates are at an all time low, that's a combination that will make potential investors think long and hard about where they locate, and it is likely to make them widen their search. Demand for space in the ‘suburban' development sites such as Sandyford and Blanchardstown is high and with cheaper rents and access to transport infrastructure its not hard to see why. One example is ESB International relocating from St Stephen's Green to the former Aer Lingus HQ in Dublin Airport. So as existing companies and potential investors are examining location sites, are we in a position to capitalise on Dublin city centre record costs?
In Belfast we too have a shortage of Grade A office space although recent planning permissions will lead to significant new space coming on stream around Wellington Square as well as at the Titanic Quarter and the Harbour. There is not much point in denying we have a lack of space as some politicians have done in the past, perhaps they were reluctant to present Belfast as anything other than the ideal location that had everything a business could possibly need.
Rents in Belfast have been creeping upwards steadily in recent years and some new developments will aim to attract up to and even above £20 per square foot. Just a year ago it was also reported that rents in Belfast were rising up to three times faster than other UK cities, maybe that is no surprise given our low starting base when not so long ago Belfast was way down the list of potential locations for investors.
However demand in our city is now very high and current requirements, that is companies actively looking for additional space, thought to be hovering around 500,000 sq ft. Indeed demand for the new office space will be so high that prices are almost sure to rise consistently over the next few years.
Despite the demand and the rising cost our base was so low that we still lag well behind comparable neighbouring cities. Edinburgh and Manchester prices are now around £35 per sq ft. Needless to say London prices are well above any other in these islands and have now hit over £80 per sq ft in some instances.
The high cost of renting space in Dublin is also reflected in the housing market, to the point where it is starting to have a negative impact on overseas recruitment in key sectors. Apartment block owner IRES has recorded record profits and the average rent it collects from apartment residents in Dublin stands at just below €1,500 per month, a 4.6 per cent rise on the average level in 2016. Demand for apartment space is increasing along with rental levels and IRES reports a 99 per cent occupancy for the 2,381 apartments its owns.
That may be welcome news for the landlords, but not for the tenant and perhaps not for the global companies who are seeking to attract new recruits. It is not unheard of now for tech professionals to turn down job offers because of lack of availability and high cost of living space. The level of those turning down employment offers has doubled in the last year from 15 per cent to 30 per cent according to a tech recruitment firm Prosperity.
“Time and again candidates from abroad have cited an internet search on the cost and availability of accommodation in Dublin as their reason for rejecting a job offer.” Prosperity Managing Director Gerry Mullan believes that Dublin is losing out to Paris, Berlin, and Lisbon among those qualified and experienced enough to pick and choose where they live.
Meanwhile Belfast needs a population expansion - we simply don't yet have enough people living in the city and while the cost of housing is reported to be increasing we are nowhere near the level of Dublin and other major cities in terms of cost or availability.
Factors which influence a firm's decision on where to locate are multiple, fluid and complex. Of course Brexit and how that will pan out is a major disadvantage and something we apparently have very little control over. Right now though we have do advantages over our neighbouring cities in terms of costs, both commercial and residential. Lets play to our strengths and sell that message.