An upbeat end to 2017 for Belfast's growing office market, say agents
Belfast's office market finished last year on a high, with take-up levels hitting 11% above their five-year average. Despite a slow start to the year, 430, 290 sq ft of office space was sold or let during the second half of 2017, according to agents Lambert Smith Hampton's Ireland Office Market Report 2018.
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The largest transactions last year were HMRC's pre-let of the 104,220 sq ft Erskine House, the completion of Concentrix's new 72,000 sq ft headquarters on the former Maysfield Leisure Centre site, and Tullet Prebon's lease of 34,692 sq ft across three floors at City Quays 2.
The completion of over 200,000 sq ft of refurbished space in 2017 was key in meeting the demand for office space in the city.
This was evident in First Derivatives' lease of more than 25,000 sq ft at the Weaving Works and Spence and Partner's lease of 9,212 sq ft at the Linen Loft, both refurbished properties.
Last year, the technology, media and telecoms (TMT) sector was responsible for around 35% of the take-up.
In addition to the Concentrix headquarters, other TMT deals included HCL at Millennium House, Wireless Group at City Quays 2 and ITV at City Quays 2.
More than 300,000 sq ft of supply will be added to the market during 2018, including the 150,000 sq ft Nine Lanyon Place, which will be ready for occupation next summer.
Stuart Draffin, the head of agency at Lambert Smith Hampton in Belfast, said that demand for good quality office space remains strong in Belfast, with take-up in 2018 expected to exceed 400,000 sq ft for the third consecutive year.
"After robust rental growth in recent years, prime headline rents are forecast to stabilise during 2018, with only a small increase anticipated. Headline rents will reach £22.00 per sq ft by year end," he added.
Greg Henry, associate director of office agency at Lambert Smith Hampton in Belfast, said it is positive to see that there are "definite signs of confidence" in the market.
"In recent years development in Belfast city centre has been relatively healthy, although speculative development has been limited, with new-build projects predominantly driven by pre-lets," he said.
"In contrast, at the beginning of 2018 four schemes are currently under construction totalling 496,220 sq ft, half of which is speculative development.
"Furthermore, there are a number of new office developments poised to begin and with demand being consistent, we anticipate that prior commitment from potential tenants will be forthcoming to initiate some of these large new-build schemes."
There are currently several office developments which are in various stages of development across Belfast. Last month, detailed plans for the first phase of the £400m regeneration of Belfast Waterside, the site of the former Sirocco Works, were submitted to Belfast City Council.
The first phase of the development, costing £50m, will see the creation of 250,000 sq ft of grade A office space at the site, which is based close to the Short Strand.