Commercial property: Invest NI needs a lesson in reality
I've been known to liken government strategies to the mistake made in Australia when the cane toad was introduced to tackle the problem of cane beetles.
In principle it was a good idea, but in practice it became Australia's largest environmental mistake. To this day the cane toad remains a pest and one of the few animals that residents are actively encouraged to eradicate.
The analogy's reference point to Northern Ireland business remains the 'modern government lease' and the detrimental effect it has had on office and investment values alongside creating a scenario where development of new facilities is simply not viable. In a recovering economy, one which is heavily based on inward investment and attracting service companies to locate here, why are we seeing no development?
Invest NI is being rightly lauded for its encouragement of and success in attracting service sector jobs to Northern Ireland - over 6,000 were announced in the year to March, but there is a serious flaw in the plan. Where are these firms going to locate? There is currently only one office development under construction and we will be waiting at least a couple of years before anything sizeable comes out of the ground in the city centre.
Delivering a viable Grade A project requires a minimum rental level of around £18 per sq ft, and yet on the Invest NI website I find the following statement: "Prime office rents are among the lowest in Western Europe. New, purpose-built and fitted-out office space costs are easily affordable with Northern Ireland maintaining the lowest net-rent in the UK. Office space is going for £12-50 per sq ft in the Greater Belfast area."
This is simply ludicrous and highlights limited commercial understanding within the public sector. Until it wakes up and realises that development is required, accepts that rental levels need to be viable and that quality product must be delivered, many of the previously announced job opportunities will be slow to come on stream.
Martin McDowell is managing director of Osborne King commercial agents