It is undeniable that the current macro-economic landscape poses a challenge to potential investment in Northern Ireland, with a lack of political accountability in Stormont and unanswered questions regarding our position after Brexit.
Despite this, investment in office accommodation has risen steadily throughout the year. It was announced earlier this month that the former Sirocco factory site on the Belfast Waterside will be developed into a 13-storey office block, along with refurbishments taking place on Albert Square to the 11-storey Graham House.
With an estimated combined investment value of £70m, there are strong indications that office investment is set to enjoy a positive uptake for the reminder of 2018, following an ‘exceptional’ start to the year.
However, there is no doubt that as we approach the Brexit deadline in March 2019 the surrounding uncertainty could have a more significant impact on potential investments. There may be a somewhat a unique opportunity for Northern Ireland as many investors recognise that our core fundamentals remain robust with strong resilience in the private sector.
In benchmarking Belfast against the rest of the UK, there are several economic catalysts on the horizon including the recent sale of Obel 68 to Belfast Harbour. This sold is excess of £15m. As an investment for the future, the majority of this Grade A office space is let to international law firm Allen & Overy.
The Metro Building, home to the News Letter, Yell and Capita, has also been agreed in excess of the asking price. The buyer, a non-disclosed investor, can expect average rent of £1.3m a year.
The encouraging levels of office occupier rates paints an optimistic picture for the industry, already this year reporting the highest levels on record. While technology, media and creative industries are leading the pack, the largest single letting of the past decade has been the Department of Finance taking up residence in 9 Lanyon Place.
It is worth remembering Corum Asset Management’s entry to the market with the purchase of Next on Donegall Place. Given the timing, this can be considered an indication of the sentiment of the property market in Northern Ireland.
Crucially, while other markets are surpassing their 2007 peaks, our capital values have grown sustainably but are still some way off pre-recession levels. Whilst the current circumstances could present an opportunity for the region, it will partially depend on our economic ambitions marrying with the political.
Either way, the property sector remains stable and office investment continues to grow. With the news that more global business entities are coming to Northern Ireland, such as European law firm Fieldfisher, the market is well positioned to sustain the current levels of occupier demand.