Record six months for office space take-up in Belfast says CBRE

Located in Belfast’s cultural hub, River House is set to open the doors of its 80,000 sq ft grade A office and retail development in October. On completion it will house over 1,000 staff with suites available from 800 sq ft up to a whole floorplate of 6,000 sq ft

IT'S been a record first six months of this year for the Belfast office sector, according to the latest update from commercial property agents CBRE.

It says the office market enjoyed a record take-up of 538,646 sq ft in 46 separate transactions between January and June.

And given that the five-year rolling average is 385,000 sq ft, for the market to surpass this by a significant margin in just six months was described by the firm as "an impressive feat".

“The Belfast office market has had a record six-month period helped undoubtedly by a couple of large transactions, but the underlying take-up figures have been very positive and the remainder of the year expected to be strong given the level of requirements in the market,” CBRE director David Wright said.

"Whilst the uncertainty in the market over the last 24 months still remains, with Brexit and the non-functioning Stormont Executive, it is extremely positive to note a record set of take-up figures, and we expect the remainder of the year to be particularly active given the number of requirements in the market."

Highlights in the first half of 2018 included the deals to Allstate and the NI Civil Service which have accounted for around half of the total take-up. There have been other notable deals to Atos, Davidson McDonnell, Aecom and Seopa.

There have also been major foreign direct investment announcements from Invest NI on behalf of companies such as Fintru (600 jobs for Belfast and Derry), Novosco (150 jobs), Slice (50 jobs), SmashFly (70 jobs) and Bamboo Rose (75 jobs).

Regarding supply, there was approximately 638,635 sq ft of accommodation available at the end of June, of which around 264,725 sq ft is classified as grade A, a 15 per cent increase since the second half of 2017.

But quality grade A supply remains low with space fragmented across a number of buildings. The market continues to rely on refurbished buildings to provide the quality stock demanded by occupiers.

The next major scheme nearing completion is River House on High Street (80,000 sq ft), followed by Chichester House on Chichester Street (46,000 sq ft). Contractors are also also on site for Merchant Square on Wellington Place which is to be delivered in the first half of 2019.

Prime average headline rents at the end of the first half of the year for best in class grade A offices stood at £21 per sq ft, a marginal increase from the

prevailing rent in 2017. Average rents for refurbished properties have been in the region of £18/£19 per sq ft.

But given limited supply and the quality of the new development space being delivered, CBRE says it is expecting best in class grade A to reach £22 per sq ft by the end of this year.

Meanwhile investment activity began to pick up during the last three months, with a number of sales completing and a number being brought to market.

CBRE says it is aware of £65 million of investment completed over the quarter bringing the half yearly total to £73 million, with a further £125 million currently available.

Investor interest in the office sector remains strong reflected in two ongoing sales.

Obel Offices, let to Allen & Overy, totalling 52,169 sq ft has gone under offer. The guide price reflected £15 million. Metro Building a multi let office building fronting Donegall Square South is also for sale totalling 69,611 sq ft with a guide price of £21 million.

There is still a wide buyer profile seeking Belfast office investment opportunities that includes UK institutional investors, private equity and high net worth local investors.

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