Why looking to Dublin could help solve Belfast grade A office shortage
They say change is constant, but it maybe hasn't felt that way when it comes to perhaps the biggest challenge in Belfast's commercial property market. The shortage of grade A office space has been well documented - but despite the problem being well-known for some time it remains chronic.
We have seen some businesses coming up with their own innovative solutions. Two well-established foreign direct investment (FDI) companies, Allstate and Concentrix, have bridged the gap from occupier to developer due to the market's failure to provide suitable options.
Occupier-led development, however, isn't a viable solution for all firms and the time lag in delivery of new space is a major impediment to attracting new FDI business. Promoting the fast-tracking of planning applications is one way in which government can help, alongside listening to what occupiers want, particularly from the FDI market.
However, grade A office rents have grown during 2016 and are at a level that will make development viable again. There are a number of significant pre-let discussions ongoing which should see the establishment of a new grade A rental tone in excess of £20 a sq ft. This would provide confidence in the development market and, at this level, new build development projects could be brought forward.
When we look to Dublin, the potential for Belfast is clear. There, the office market is extremely buoyant at present. Nine out of the top 10 global software and US tech firms have an Irish presence.
Dublin also has a shortage of space, but it has seven million sq ft in the pipeline - with half of that under construction. Dublin looks well placed to continue welcoming major global occupiers.
With the prospect of a lower rate of corporation tax, our tech skills-base well aligned between university and industry, and growing office rents making speculative development more viable, could Belfast be in a position to follow suit? The optimist in me says yes, but there is a lot of work to be done in delivery.
- Tracy Flannigan is commercial property spokesperson for RICS (Royal Institution of Chartered Surveyors) in Northern Ireland. She is also a director with commercial property consultancy Colliers International