CBRE figures show strong year for Belfast's office market

An artist's impression of the office building at the City Quay phase 2 site
Andrew Madden

DESPITE a turbulent year for politics, the Belfast office market is alive and well, posting a 40 per cent take-up in 2016.

Figures from commercial property and real estate adviser CBRE show that there were 63 transactions from prime space in the city last year, amounting to around 435,000 sq ft in up-take.

Whilst there were shock results in both the EU referendum vote in June and November's Republican trumping at the US polls, the Belfast office market managed to brave any potential storm and post its best year since CBRE began recording the figures in 2011.

Research by the firm also notes that the 2016 take-up represented a 25 per cent year-on-year increase on the five-year average, which has now moved to 353,000 sq ft.

In November, prime office rents increased to their highest value in years, hitting £18 per sq ft - a year-on-year rise of nearly 20 per cent. Prices in the city have generally stagnated below £16 per sq ft in recent years.

When compared to the rest of the UK, Belfast office prices are some of the most competitive. For instance, rates in Edinburgh are around £32.50 per sq ft and rates in Manchester hit £34 per sq ft earlier this year.

Indeed, throughout 2016 demand for office space in Belfast seemed to be outstripping supply and several developers took advantage of this discrepancy.

Belfast Harbour is already into phase two of its £250 million City Quays project which will see multiple office buildings erected around Clarendon Dock, with the 83,000 sq ft phase one building already successfully operational and filled with tenants.

Paddy Kearney's Kilmona Holdings is also in the early stages of a plan to deliver two office blocks at a £55m development on East Bridge Street.

CBRE's director David Wright, however, warned that while the latest figures did reflect a strong office market, future planned changes to the rates system by officials at Stormont could tip the scales in the opposite direction.

In November, finance minister Máirtín Ó Muilleoir proposed increasing the rates on commercial vacant properties. Mr Wright suggested these changes would act as a "barrier" for developers looking to address the demand for prime office stock.

"We need to encourage new development to help Belfast compete with other European cities to attract FDI as well as assist our local companies expand and attract new talent," he said.

"To do this, developers should be incentivised to start new office schemes rather than potentially being penalised by a proposed harsher vacant rates regime.

"In order to encourage new office development we would call on government to consider offering a longer rates free period to developers."

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