The fourth quarter of 2017 was the strongest quarter for the Belfast office market in two years, bringing the total take-up of office space for 2017 to 430,290 sq. ft.
According to Savills Northern Ireland, this is the second consecutive year – post Brexit – of robust take up, with levels back to the peak of 2007 – and rents approximately 50% higher. However, Savills note the real prime rent has yet to be tested due to a lack of new stock.
The current vacancy rate stands at 7.2%, with the more revealing and relevant Grade A vacancy at 3.1%, and there are no city centre options available that can offer in excess of 25,000 sq. ft. of contiguous space.
Savills Northern Ireland anticipate further pre-lets in 2018 with larger occupiers securing their preferred buildings, however, for the market to continue to meet indigenous and FDI demand, speculative development will be required to start in the city centre.
The most notable transaction of 2017 was the HMRC pre-letting of 104,220 sq. ft. at Erskine House on Chichester Street, however Technology, Media & Telecommunications (TMT) occupiers continued to be the most active sector, accounting for 19 of the 47 transactions – and 33% of the overall take-up.
After phenomenal rental growth in 2015 and 2016 of over 25%, prime rents in 2017 held 2016’s level of £21.50 per sq. ft., however this was due to lack of any new developments available in the market, with demand largely met in 2017 with the delivery of refurbished space.
Refurbished offices typically offer occupiers improved specification in an existing building at a discounted rent from new developments, however this discount has largely eroded with the next wave of refurbished offices due in 2018 quoting £23.50 per sq. ft.
Speaking this week, Simon McEvoy of Savills Northern Ireland, commented, "It is great that we have a pipeline of refurbishment projects to help meet immediate demand, however if Belfast is to continue to attract global firms that are fighting to retain and attract employees, then we need to deliver the next generation spaces, replacing tired, old and uninspiring accommodation with modern office buildings that provide plenty of amenity."