Strong year for Belfast lettings, but more grade A office space needed
This year has marked a strong period for the office lettings market in Belfast as we reach the end of the first half of 2016.
An impressive volume of office take-up of more than 158,000 sq ft was achieved in Belfast in the first quarter of the year boosted by lettings to occupiers including Puppetlabs, BRS Golf, Highwire, Genpact and Liberty IT.
However, there is still an issue with demand for grade A office space building up and a lack of supply or investment in new space being constructed.
The City Quays development which is being developed by Belfast Harbour is going some way to address this issue. Office take-up has been generally encouraging in 2016 with several new entrants and expansion by BRS Golf, Genpact and Liberty IT.
With HMRC seeking 110,000 sq ft for Belfast offices and the BBC 100,000 sq ft for a new headquarters in Belfast, the demand for office space is still really strong.
We have been seeing a number of new office schemes and office refurbishments such as the Ireland Brothers building upgrade to the Linen Loft grade A space.
However, the fact remains that current supply shortages of grade A stock still exist in the city.
When City Quays 1 was developed, it was much needed space and CBRE acted for its first tenant, Baker & McKenzie who took around 28,000 sq ft and the remainder of the office scheme has now been fully let with tenants including Cayan and BRS Golf.
Belfast Harbour speculatively constructed this space and in doing so were able to satisfy some of the pent-up demand within the grade A office market.
The success of the development was demonstrated by the quick update in space with approximately 80% of City Quays 1 pre-let before construction even completed.
The Harbour also went to great lengths to understand what occupiers required and designed buildings accordingly - with large floor plates, excellent natural light, generous common areas and enhanced environmental credentials which in turn help to reduce the office running costs.
City Quays 2 is now under construction and is the only new grade A office building proposed for delivery into the market in 2017 at the present time.
It will certainly be a valuable addition to the market, particularly with the expected increase in interest from foreign direct investment (FDI) companies seeking to capitalise on the reduction of corporation tax to 12.5% in April 2018.
However, the fact remains we need much more grade A office space developed to ensure Belfast prospers as a foreign direct investment location.
David Wright is office agency director at commercial property firm CBRE