Despite a modest level of investment transactions so far this year, the Lisney Q1 2019 Northern Ireland Commercial Property Report has revealed that the uncertain political climate remains a difficult backdrop for inward investors.
A total of £41m of commercial property investments were transacted in the first quarter of 2019 compared to £10m within the first quarter of 2018 with a further £52m million agreed during this period.
Declan Flynn, Managing Director of Lisney Northern Ireland, which specialises in office, retail, leisure and industrial property acquisition, disposal and investment, commented:
“In light of local political stalemate and the uncertainty as a result of the missed Brexit deadline, it is unsurprising that the majority of these transactions have been completed by local investors.
“Whilst this creates a barrier for inward investment, it is important to note that the tentative nature of the market is mirrored right across the UK, and given the assets either on the market, agreed or quietly available, we do see potential for increased transaction levels throughout 2019.”
Additional headline findings from Lisney’s most recent Commercial Property Report revealed that:
- Notable investment transactions include James House in The Gasworks sold for £14m and Donegall House for £9.6m
- £52m of investments marketed for sale in Q1 are now noted as ‘Sale Agreed’. This includes Gateway Offices in Titanic Quarter, Timber Quay in Derry/Londonderry, and Antrim Business Park, Kilbegs Road
- 106,779 sq. ft. of office take up was reported in Q1
- Immediate availability of Grade A office space within Belfast remains limited at less than 200,000 sq. ft. spread across a number of buildings
- Prime retail locations in Belfast city centre are achieving rents of £150 per sq. ft.
- Discount retailers continue to be amongst the most active within the sector
- Demand for industrial/logistics space driven by owner occupiers
- 532 new jobs announced in the industrial and logistics sector will prompt movement through expansion or relocation
Mr Flynn said:
“2018 was a record-breaking year for office take-up locally which totalled 885,000 sq.ft. Unsurprisingly the take up in the last three months – across 14 transactions – is less than take up within the same period last year (270,310 sq. ft.) but the sector remains dominated by tech and digital companies.
“The trend for co-working space locally has also continued to rise with some operators close to capacity. It is understood Eagle Star House will be transformed into design-led flexible workspace.
“Whilst availability of Grade A space in Belfast is limited at present, the completion of Chichester House in Q4 will bring 46,000 sq. ft. of much needed Grade A stock to the city centre and the fact that there is a strong pipeline of stock to be delivered throughout 2020/2021 is encouraging.”
Of the retail sector, Mr Flynn explained:
“Across the UK, the retail sector has seen the lowest quarterly investment volumes traded in a decade. Company Voluntary Agreements (CVAs) and administrations continue to be amongst the headlines and Belfast city centre continues its recovery following the Primark fire last summer.
“However, all is not lost for with B&M and Home Bargains unveiling plans for new stores at Belfast’s Park Centre and further acquisitions in the pipeline for 2019 and beyond. The food and grocery sector remains buoyant with Lidl leading the way following its acquisition of a 26,000 sq. ft. site at The Junction.
“Further retailers acquiring sites in Q1 include O2, Radley, Toy Town, Superdrug and Greggs. We would therefore expect to see an increased number of openings in the next six months, likely to be spearheaded by food, beverage and grocery retailers.
“Activity within the industrial/logistics sector continues with a mix of letting and sales with demand being driven by owner occupiers seeking to purchase for their own requirements. Companies such as CDE Global, Terex Corporation, Edge Innovate, Finnebrogue Artisan and Boyce Precision Engineering have announced the creation of a combined 532 new jobs alongside intentions to either extend facilities or purchase new premises.
“The first quarter of the year also saw trade only kitchen supplier, Howdens, enter the Northern Ireland market with a number of branches including a double bay unit in the Meadows Business Park.
“Looking ahead to the rest of year we can expect strong demand for well located large space with eave heights in excess of eight metres.”
Lisney’s latest report on the Northern Ireland commercial property market can be viewed in full here: https://belfast.lisney.com/research-reports/northern-ireland-commercial-update-q1-2019/