AN unprecedented rise in rents is set to fuel a resurgent office market in 2018 according to a new report.
In its 2017 Northern Ireland Commercial Property Report, Lisney said a rise in office investment numbers in 2018 is anticipated “as both vendors and buyers look at the opportunities presented by rental growth in the past 24 months”.
The figures for last year show that investment volumes surpassed 2016 levels to hit £305 million, with an expectation that a rise in the number of transactions will see similar levels achieved in 2018. Lisney said that, while capital values in Northern Ireland remain “some way off pre-recession levels”, the core local markets “remain robust”. The agency pointed to a sustained period of growth in the retail sector, where vacancy rates for prime Belfast units stood at 9 per cent at the end of 2017.
Office take-up in 2017 fell to 325,000 sq ft from 535,000 sq ft in 2016, while the industrial sector performed strongly last year with the sale of the former Coca Cola factory at Lambeg (266,470 sq ft), the most notable transaction.
Managing director of Lisney, Declan Flynn said against a "challenging economic backdrop" the Northern Ireland commercial market remains healthy.
"The largest transaction of the year was the sale of CastleCourt to local asset manager Wirefox, and it is positive that off-shore equity has chosen to invest in Northern Ireland against the backdrop of a challenging retail investment market in Great Britain.”
Looking ahead Mr Flynn is positive for 2018.
"We are confident that occupier demand for Northern Ireland will increase throughout the next 12 months, with particular focus on the prime and regionally dominant locations.
“Retail investment in key Northern Ireland schemes is likely to generate strong results and, with the letting strategies of assets such as CastleCourt, The Junction, The Boulevard and the Odyssey hitting their stride, we expect to see a number of new lettings announced."
“In what is a welcome development, we have begun to see several Republic of Ireland-based companies making tentative enquiries for office space in Northern Ireland, which we assume is stemming from the potential implications of Brexit. This can only be positive for the sector," he added.
