Following a spectacular 2018, the office market in Belfast maintained a healthy momentum in 2019, with both new and established occupiers demonstrating their confidence in the city, according to Lambert Smith Hampton’s Ireland Office Market Report 2020.
At 517,380 sq ft, annual take-up was closely in line with the five-year annual average. With fewer large deals in 2019, the market continues to be driven by strong demand in the sub-10,000 sq ft category.
Notably, the three largest deals were current occupiers relocating to new build or extensively refurbished buildings. The largest deal of the year was Deloitte’s leasing of 80,000 sq ft at The Ewart, Bedford Square, with an option for an additional 35,000 sq ft. Rapid7 will move into Chichester House (47,651 sq ft) in August 2020 and PwC leased the remaining 46,000 sq ft at Merchant Square (212,000 sq ft) to become the building’s sole occupier in Autumn 2020.
Elsewhere, the refurbished Eagle Star House (31,969 sq ft) was leased by co-working operator UrbanHQ who will open an eco-friendly design-led workspace in summer 2020.
The professional services and technology, media and telecoms (TMT) sectors emerged as the key drivers of deals and take-up in 2019, together accounting for almost three-quarters of the total.
Key TMT deals included Proofpoint’s letting of the new Laser 2 at Weaver’s Court (34,000 sq ft) and Neueda’s lease of the refurbished West Tower at Lanyon Plaza (29,220 sq ft). Dynamic Signal and Signifyd each leased 11,630 sq ft at River House.
At 466,150 sq ft, total availability has fallen to a record low and is equivalent to only 0.9 years supply. Over 1.4m sq ft of take-up over the past two years, coupled with a lull in speculative development and larger refurbishment schemes has severely dented supply.
While supply decreased overall between 2018 and 2019, grade A supply rose 25% to 307,312 sq ft. This increase was primarily driven by refurbishment projects that commenced during 2019. Available schemes currently under refurbishment with completion scheduled in the next 12 months include The Vantage on Great Victoria Street (65,000 sq ft), The Kelvin at College Square East (37,796 sq ft) and East Tower at Lanyon Plaza (41,000 sq ft).
Greg Henry, director of agency at Lambert Smith Hampton, said: “2019 was a quieter, but nonetheless, solid year for the Irish office markets. Prime headline rents continue to push upwards, currently standing at £23.00 per sq ft and forecast to reach £24.00 per sq ft by the end of 2020.
“Speculative development is reaching new highs, with Belfast Harbour Commissioners continuing to bring forward their vision for the docklands. They broke ground on the next phase of their mixed use waterside development, the 181,169 sq ft City Quays 3, in May 2019. This 16 storey office is due for completion in Q3 2021.”
With the backing of US private equity firm, Sculptor Capital Management, Wirefox commenced construction of the Paper Exchange on Chichester Street in February 2020 (155,133 sq ft) due for completion at end 2021. This is the first privately funded speculative build in the last ten years.
Elsewhere, there are significant pipeline developments with planning permission including Building Blocks at Smithfield (115,000 sq ft), Olympic House at Titanic Quarter (150,000 sq ft), the redevelopment of Norwich Union House (170,000 sq ft) and Belfast Waterside at the former Sirocco works (250,000 sq ft).
Mr Henry continued: “The COVID-19 pandemic will have an impact on both the occupier and investment market. Currently the busy start to the year continues, with the vast majority of occupier and investment deals already in legals moving forward and a healthy occupier requirements book. We are, however, expecting a slowdown in activity over the coming months as the UK and Irish Governments continue to place further restrictions on the movement of people.
“We expect demand from both occupiers and investors will bounce back in the second half of the year.”
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