Research - 22/08/2017

Belfast Office Market Report H1 2017

Belfast office market activity on course to exceed 10 year average

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Office market activity in Belfast for 2017 is on course to exceed the average take-up level over the last ten years with 100,000 sq ft of space currently under offer according to our latest Belfast Office Market Report H1 2017.

Grade A stock dominated deals during the first six months of 2017, accounting for 86 per cent of all activity. Availability has more than doubled in the first half of 2017, rising by 56 per cent to around 982,000 sq ft, boosted by the imminent completion of a wave of speculative development and refurbishment projects.

However, at 167,568 sq ft, take-up in H1 2017 was down 20 per cent on the previous six months and 28 per cent on H1 2016.  

During the past 12 months, demand has been driven by public sector and professional services occupiers, together accounting for 61.8 per cent of take-up. Notable occupiers in the public sector included HMRC (104,220 sq ft) and Tourism NI (17,649 sq ft). Within professional services notable occupiers included KPMG (39,374 sq ft) and Axiom (26,100 sq ft).  

Development in Belfast has gained momentum, with 815,000 sq ft of speculative development anticipated to commence over the next 12 months, including One Bankmore Square (250,000 sq ft), Bedford Square (215,000 sq ft), The Paper Exchange (200,000 sq ft) and Olympic House (150,000 sq ft). Further, there is 1.8m sq ft of planning approved office space and 641,000 sq ft with planning applications pending. 

Stuart Draffin, head of agency at Lambert Smith Hampton in Belfast, said: “Despite the climate of uncertainty, the outlook for the Belfast office market is positive. Healthy demand exists among occupiers, and there has been a welcome improvement in quality supply and speculative development. With an additional 100,000 sq ft of office space agreed and some of the lowest occupational costs in the UK and Ireland, we forecast that 2017 take-up will exceed the 10-year average and total circa 300,000 sq ft.” 

Greg Henry, associate director of office advisory at Lambert Smith Hampton in Belfast, said: “Prime rents at the end of H1 2017 are sitting at £20 per sq ft, up from £18.50 per sq ft at end of 2016. We expect further rental growth this year and for rents to benchmark at £21 per sq ft by year end. 

“One year on from the Brexit referendum take-up in the office market during the 12 months after the vote has totalled 379,772 sq ft, 30 per cent above the 10-year average but 16 per cent down year-on-year. Given the political instability that followed the referendum both locally and nationally, the office market has been very resilient and continues to demonstrate Belfast’s attractiveness as an office location.”

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