THE SPACE RACE CONTINUES
22 April 2015Anyone who has been searching for office space in Belfast recently may have been surprised by the lack of high quality space available in the city centre and Greater Belfast area. In the last 12 months there has been a significant upturn in occupier requirements for “Grade A” space which has been driven by a combination of arriving US and UK based firms absorbing space and local companies seeking to expand after a period of consolidation.
At present city centre headline rents are in the region of £15.00 per sq ft (albeit INI quotes £12.50 per sq ft) and we expect this to increase over the course of 2015. In simple terms, the demand for “Grade A” space is outweighing the existing supply and there is only one new build office development underway at present – ‘City Quays’ at Belfast Harbour. In an ideal world private landlords would have started other ‘new build’ schemes around the city, but there’s a problem ....
Based on the best current headline rental levels of c. £15.00 per sq ft it is not economically viable for developers to construct new premises. Office rents will need to be in the region of £18.00 - £20.00 per sq ft before cranes appear on the Belfast skyline once again.
In recent years Northern Ireland has become a viable office location for global firms. Our package of low occupancy costs, comparatively low wage costs and good quality of life has been key in attracting new occupiers and will continue to do so going forward, if a cut in corporation tax is delivered it should enhance an already attractive offering. INI have been successful in attracting job opportunities but the lack of Grade A space will delay these coming on stream, INI need to understand the commercial realities required to deliver new build projects.
To meet the increasing demand a number of private landlords are in the process of refurbishing existing office stock. This will create some excellent opportunities in the short term for those looking to expand.
It’s vital that tenants are correctly advised when seeking to acquire new accommodation, given the lack of available high quality space opportunities may arise in the form of lease assignment or sub-letting opportunities, not all of these will be advertised on the open market.
There are a number of advantages to appointing an agent to carry out your office search on your behalf: • Ensuring that you are looking at space which matches your requirements and that you are aware of all ‘on market’ and ‘off market’ opportunities.
• Advising you on overall occupancy costs including Rent, Rates and Service Charges.
• Negotiating lease terms on your behalf to ensure you have the flexibility you need within your cost budget.
• Knowledge of upcoming/newly refurbished office stock and new build developments that may be in the pipeline.
The arrival of new tech sector companies to Northern Ireland along with the growth of those already based here is an exciting prospect and will further enhance the office sector within Northern Ireland, albeit occupiers in this sector need to appreciate that landlords are not used to companies who can grow extremely quickly and often require expansion space following the first 12 months of occupation.
Appointing a professional advisor to search for premises and negotiate your occupancy terms will help to deliver the flexibility required and ensure that your property requirements don’t become a problem.