Posted on Wednesday 28 January 2015 by Ulster Business
Enda Luddy, Managing Director CBRE Ireland; Marie Hunt, Executive Director, Head of Research, CBRE Ireland and Brian Lavery, Managing Director CBRE Northern Ireland
The rental value of grade A office space in Belfast is creeping higher and will reach £16 a square foot in the coming year, according to agents CBRE.
Its outlook for 2015 said growing demand from inward and current investors coupled with a lack of new office completions will drive rental values up from the current level of around £15/sq ft.
Despite the expected increase, it remains to be seen whether the hike is enough to tempt developers to build more grade A space; they are thought to need closer to £18/sq ft in rental before taking on a new office build.
But there is no time to waste, according to CBRE, particularly if corporation tax-setting powers are finally devolved to Stormont.
“The need to commence new schemes is evident but without development finance, this cannot materialize,” the report said. “With new office schemes taking up to two years to complete, there is no room for procrastination with development needed urgently to meet current and future requirements.”
Even with expected rise, Belfast prime office rent still compares well to Dublin at £33/sq ft, according to CBRE’s Head of Research Marie Hunt.
Speaking at a presentation of its Northern Ireland Commercial Real Estate Outlook 2015, she said the cut in corporation tax could be “game changer” for the Northern Ireland economy.
Managing Director Brian Lavery said the last year had been a busy one for the commercial property market.
“2014 was a remarkable year for the real estate market in Northern Ireland with the volume of transactions in the investment sector exceeding expectations – in fact there were almost £500 million of investment sales completed in Northern Ireland during 2014 – up threefold on the previous year.
“In addition, approximately £1.7 billion of loan sales were completed in the region in 2014 with the most significant being the loan sale of the entire NAMA portfolio to Cerberus in the first half of the year.”
“We anticipate a similar level of activity in 2015 given the amount of deleveraging that has yet to occur across the region and the nature of the assets to be traded. The entire real estate sector has been transformed from a debt-based model to an equity-based model with a larger proportion of institutional activity now evident as well as new entrants emerging. In addition we are starting to see increased levels of secondary trading of assets, which is generating more transactional activity.