Investment's fine, but Belfast is running out of space
The commercial property market in Belfast appears to be going from strength to strength, with multi-million pound deals becoming a frequent occurrence.
The latest is the sale of the ultra-modern and shiny Victoria House, which has been snapped up by F&C REIT Investment Managers in Dublin for well over £8m.
Our modern office buildings are attracting much interest from buyers, with Windsor House in Bedford Street also under offer.
The attraction of desirable office space to buy has been spiralling since the purchase much earlier in the year of the Obel building by Marathon Asset Management for £20m.
That the buyers of Victoria House are Irish is bucking the trend. The purchases of our property trophies — from Lough Erne Resort to the Obel — tend to be American funds who will keep their heads down and not cut a visible dash as business leaders or asset owners.
And who can blame them? A building like Victoria House will virtually pay for itself over time, with blue-chip tenants like Arthur Cox, Oracle Corporation UK, the Royal National Royal National Institute of the Blind, Cybersource NI Ltd, AON McMillen Ltd, Zurich Insurance plc and IBM UK Ltd.
Who needs a public profile with such cash cows to pay the rent?
The majority of the tenants are significant inward investors, with long term leases and a major commitment to Belfast. Therefore there’s no reason why a buyer would not wish to snap up such a property.
But the speed with which such assets are moving does throw into relief the clear demand for high-end office properties — and heightens the fear that we may soon run out of desirable spots to house inward investors.
Back in November, Declan Flynn of Lisney Property Agents said: “Dwindling availability of top-end office space in Belfast is clearly undermining efforts to attract multi-national corporations to Northern Ireland.”
That brought a rebuttal from Enterprise Minister Arlene Foster and the Department of Enterprise, Trade and Investment, which said there was no sign that investors were being deterred by a lack of office space.
“The current level of availability of Grade A office space is not negatively affecting its ability to secure investment projects,” she told the Assembly.
It’s clear that prestigious firms want office space which reflects their self-image, while investment firms want the assets containing those firms.
We are in danger of running out of modern office blocks to house the inward investors we so clearly need.