THERE was 1.24 million square feet of empty office space on the market in Northern Ireland at the end of 2022, according to a new report.
Analysis from real estate specialists CBRE, which largely focuses on the Belfast market, reveal the availability of office space is five times that of 2018.
The Covid-19 pandemic and the widespread adoption of remote working has transformed the office market here.
And while the 314,916 sq ft of space taken up last year across 53 transactions marked an 84 per cent increase on the 170,804 sq ft from 2021, it was 64 per cent down on the 885,023 from 2018 and 40 per cent below the 517,380 sq ft occupied in 2019.
At the 2022 take up rate, it would take around four years to fill the current office space available.
CBRE estimate around 400,000 sq ft is needed to meet the current demand.
The £45 million speculative office scheme The Paper Exchange, located on Belfast’s Chichester Street, is due to bring another 155,000 sq ft of office space onto the market when completed in early 2023.
Otherwise, just a handful of small office projects are currently still in the works in Belfast.
Most of the major developments appear to have either been put on hold or abandoned altogether.
Bywater Properties and Ashmour Developments last week confirmed it had scrapped its Smithfield office proposal in favour a student accommodation scheme.
The Tribeca and Belfast Waterside regeneration projects, which between them propose in the region of 1.3 million sq ft of office space, appear to have lost momentum.
Much of the activity from 2022 was recorded in the second half of the year as a number of firms moved into the city’s newest grade A office schemes.
Law firm Tughans, recruiter MCS Group and AXA Insurance moved into the £85m Ewart office development on Bedford Street, while US insurance firm Aflac moved into the recently completed City Quays 3 high rise tower.
CBRE said serviced offices remain a small portion of total office stock in the north. But that is likely to change as more companies look to build in flexibility post lockdown.
Rent-wise, the property firm said the highest grade of office space in the north is currently priced at around £24 per square foot.
Average rents for refurbished properties have been in the region of £18 to £20 per square foot.
CBRE NI said they expect rents for grade A office space will increase in 2023.
A total of £330m was invested in 36 office deals during 2022. The biggest deals included the £15.9m paid for 35 Donegall Place and the £7.1m for Imperial House, both in Belfast.
However, CBRE director David Wright said inflation and political uncertainty pose challenges for the market in 2023.
“We expect 2023 will be challenging for the commercial property market, however within the investment sector we can take comfort that the banks remain well capitalised and that there is a good weight of capital waiting to be invested into commercial real estate, albeit at realistic pricing.”
