There has been no secret made of the fact that there is a shortage of suitably sized, Grade A office floor plates in Belfast. Several years ago we raised the prospect that by 2014 demand for Grade A office accommodation in Belfast would outstrip supply. Due to growing demand and a lack of capital to support new construction or to even purchase development land, we are now in a position whereby this is a reality.
With financial indicators changing in a positive manner, a greater number of investors are now searching for opportunities in Greater Belfast that will allow them to take advantage of the resulting rising rental values. The Lisney Northern Ireland Commercial Property Report, issued last month, revealed that we are already seeing prime ‘headline’ rental levels on the move with the most recent evidence rising to £15.50 per square foot. This is still considerably lower than average headline rents in cities such as Cardiff, Dublin and Glasgow, putting Belfast at a clear advantage in terms of occupational costs.
Whilst we do expect to see more cranes on the horizon in Belfast in 2015, investors keen to secure their presence in desired markets immediately are looking outside the box to sites which provide opportunity outside the current use.
A prime opportunity for this is a derelict building, or even an old car park!
For example, acting on behalf of fixed charge receivers Lisney sold Clarendon House, a derelict building on Adelaide Street in Belfast with planning consent for hotel and office space. It is understood the new owners, who were happy to compete above the asking price, will seek planning approval to accommodate Grade A office space solely. In time this will provide an increased supply of much sought after Grade A stock. This would be a very welcome change for Belfast city centre.
We have also acted on behalf of a fixed charge receiver to sell a former multi storey car park in Liverpool to a leading English student housing developer. With the economic environment improving, the number of students committing to a university path has increased making student accommodation a very hot topic in the commercial property world. Spotting a golden opportunity, the new owners of the site, considered the existing hotel, apartment, car park and retail consent and have since resubmitted a planning application for the development of 500 bed space student accommodation.
The interest in this site was significant going to best and final bids before selling well in excess of the asking price.
Interestingly, a number of bidders who were unsuccessful on the Liverpool site went on to bid for Clarendon House in Belfast with the intention of transforming that into student accommodation, but after being out bid have since purchased elsewhere locally.
With prime development sites coming under the microscope due to an improvement in access to capital I would expect this market activity to become even more commonplace throughout 2015 as investor/developers will be keen to stake their claim, as rents begin to rise, ahead of their competitors.