Despite all the economic uncertainties surrounding Brexit, Q4 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 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.
Simon McEvoy of Savills Northern Ireland said: “Despite a challenging market in 2017, there were a number of positives, including HMRC taking the largest pre-let on record at Erskine House, the mid-letting of Weaving Works to First Derivatives and the continued new demand and growth in the TMT Sector demonstrating the attractiveness of the city for FDI’s. However, the supply of new Grade A offices remains the limiting factor.”
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.