Scramble for top office space leaves critical shortage in city
National retailers are looking to enter the Northern Ireland market and office uptake is booming, according to a new report from a Belfast property consultancy.
McConnells have said that 2013 marked a turning point in the commercial property investment market, with many high profile premises coming to the market and Belfast city centre in particular looking "much more healthy".
However, the report claims that Grade A office supply has now reached critical levels, with much remaining available space being snapped up late last year.
During 2013, the firm sold a former FCUK retail building on Cornmarket to a private local developer who will refurbish and re-let.
Private clients of McConnells have also just obtained planning consent for the conversion of a redundant 12,000 sq ft office building on Donegall Street, over-looking the University of Ulster, to 45 student housing units.
The university has just secured £150m in loan finance from the European Investment Bank to assist in its £300m expansion which will see some 15,000 students in the city centre campus by 2018.
In the leisure sector, McConnells made further restaurant lettings in the third quarter of 2013 to Michael Deane, for an extension of his business on Howard Street and to a new Italian fusion restaurant at Wellington Place.
The report said the office sector is powering ahead, with office uptake figures in Belfast city centre 50% up on the previous year.
Rentals are beginning to rise with £14.50 headline achieved at Titanic and £12 in the city centre.
McConnells said that demand has come from both indigenous companies, and from expanding foreign direct investment, particularly in the IT and legal sectors.
The report said that in 2013 alone, Citi Group expanded in Titanic Quarter taking a further 20,000 sq ft, Arthur Cox signed for 17,500 sq ft at Victoria House on Gloucester Street, and McConnells took 4,000 sq ft for themselves and 6,500 sq ft for TLT Solicitors in Montgomery House. Concentrix also expanded into a further 30,000 sq ft of secondary accommodation in River House.
In a bid to claw back some space, Belfast Harbour Commissioners have commenced a 70,000 sq ft development on City Quays and at Weavers Court, McConnell's client Linfield Properties are building a 20,000 sq ft office development.
Other than these, the report states that there is still "precious little" speculative building in the pipeline.
FACTFILE: HIGH PROFILE DEALS
* James House, a modern government let office building in the Belfast Gasworks, sold to Threadneedle for a reported £10.1m.
* Premier Inn hotel, at Donegall Street/Waring Street, was bought by CBRE Global Investors for £9.025m.
* 2-8 Donegall Place and 26-28 Castle Place, let to McDonald's and Next Group, is in contract albeit it at a considerable discount to the unrealistic 2012 £5.9m asking price.
* Tesco foodstore investment in Portstewart sold off-market for £2.6m.
* Tesco Express on Royal Avenue, Belfast, made £800,000.
* Arthur House on Arthur Street, leased to Avoca and Glandore Business Centres, acquired for £5m.