It’s been well documented that demand outstrips supply for quality office stock in Belfast. However, we are starting to see the first bricks laid across the city to address the issue.
In recent weeks we’ve witnessed the return of construction teams on significant projects in Belfast, such as in Adelaide Street where work has commenced on new 100,000 sq ft office building for Belfast City Council.
Stargime’s 80,000 sq ft of Grade A office suites on the site of the former First Trust Bank at Queen’s Square will also commence this year.
Indeed last week’s Government figures highlight the construction sector saw growth of 7.8% during Q1 of this year which will be welcome news to all concerned.
With funding for speculative development still a challenge, it was great to see the recent announcements by Hastings Hotels in the redevelopment of Windsor House and the Beannchor Group plans for Lagan House, both albeit for hotels.
Rents for any new builds will push well beyond the current peak of £15/16 per square foot as demand continues to spiral.
Another sector that receives little publicity but is an important spoke in the wheel of our economy is the industrial sector.
Put simply, there is a severe shortage of good quality industrial stock across Northern Ireland.
Mid-Ulster, where there is strong demand, is particularly constrained.
In Portadown, which has a traditionally been a bedrock of industrial stock, options are very limited.
Earlier this year we had a client seeking a 12,000 sq ft warehouse in the area and the options were so few that they had to widen their search to cover a much larger radius.
Occupiers seeking space in Portadown are now engaging in design-and-build projects, with the rents being achieved for these, at levels required to make the build viable, i.e. £6 - £7 psf for shell units, which is ahead of market rates.
Recently, the former Tyrone Brick premises in Dungannon was agreed. This comprised of a 240,000 sq ft building on 70 acres. The sale generated considerable interest and competitive bidding due to the uniqueness and size of the asset.
Within greater Belfast, Mallusk Industrial Estate in Newtownabbey is also experiencing a shortage of quality accommodation.
A 13,000 sq ft unit recently came to the market to rent in this estate and a bidding war between various occupiers ensued to secure the space.
There continues to be limited supply in Newry as a number of the remaining vacant units were either sold or let in recent months.
In the short-term we expect to see a number of opportunities come to the market on a for sale basis. These will primarily stem from receivership sales and while this increased supply will be welcomed, it will not meet the demand that is present.
As such, development for industrial units, as is the case for office units in Belfast, will require further development to meet demand.