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2020 will be ‘year of opportunity’ for north’s commercial property market

THE north’s commercial property market ended the year with a much needed boost with the sales of Sprucefield retail park in Lisburn by Intu and Crescent Link Retail in Derry by the Lotus Group.

The combined value of these deals, at £70 million, brought the total value of commercial property investments in Northern Ireland for 2019 to just over £210m.

Property investment at this level is a considerable improvement on levels seen in 2018 at £165m, though there is a long way to go to reach the five-year average at just over £300m a year.

The subdued level of investment in 2019 is not surprising given the uncertainty around Brexit over the last few years, and we would expect investment levels to bounce back strongly this year given the strong mandate the Conservative Party received in the recent general election and the relatively stable macro-economic outlook

The office sector again performed strongly in 2019 with take up of 517,000 sq ft, well ahead of the five year average. Significant deals throughout the year included the signing of leases by Deloitte for 80,000 sq ft in the Ewart Building on Bedford Street, PwC taking the remaining 46,000 sq ft in Merchant Square and the letting by Kilmona of the entirety of Chichester House on Chichester Street to Rapid 7.

The outlook for 2020 for the office sector also looks strong with stated requirements in the market in excess of 400,000 sq ft including the NI Civil Service Requirement for 161,500 sq ft and the as yet unsatisfied Citi requirement for 120,000 sq ft.

Available prime office stock is as usual fairly limited though buildings including The Sixth, Paper Exchange and The Mercantile all in prime locations could be brought on stream this year subject to suitable pre lets.

Trends in the office occupier market are set to continue with co working/serviced office providers predicted to continue their significant expansion throughout the UK.

Technology is as ever set to change the way we work though it is unlikely to affect the demand for office space in the short to medium term as office workers need to interact with each other in an easily accessible work enhancing environment.

The continuing challenges in the retail market will create opportunities both for successful retailers to relocate to better position and for investors who are prepared to look at the sector. There will be undoubtedly be a need for alternative uses for retail space in both suburban shopping centres and retail parks but also in our towns and cities given that the prime retail areas are becoming smaller.

In order for our bricks and mortar retailers to successfully continue to compete with the steady advance of the internet, our government will have to look at the level of rates charged to retailers and work out a way to balance the playing field with their internet competitors. though where this sits on the level of government priorities remains to be seen.

On balance, the outlook for 2020 is a positive one and we look forward to the challenges that the year ahead will bring.

By Declan Flynn

Source: Irish News

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North’s commercial property market reports healthy start to 2019 and further positivity ahead

THE north’s commercial property sector enjoyed a positive start to 2019, according to the latest market research.

The new report from Lambert Smith Hampton, which covers the first three months of the year, shows the total investment volume of £42.5 million was almost three times higher than the same period a year ago (£17m). However, that figure is 47 per cent below the five-year quarterly average.

The latest Investment Transactions Northern Ireland Bulletin is a continuation of consistent investment witnessed over the last year, but the total of five transactions last quarter is the lowest in five years.

The deals struck in the first three months of year were largely dominated by the office sector, with the largest transaction at the start of 2019 a local government department’s £16m purchase of James House at the Gasworks in Belfast.

Other notable transactions included the £9.6m sale of Donegall House to a private investor group, as well as retail operator Henderson Group’s £7.6m acquisition of a portfolio of petrol filling stations, which they already occupied as tenant

While there were a flurry of large retail transactions at the end of the year, retail was notably absent at the beginning of 2019.

Looking ahead a significant pickup is forecast in the second quarter of the year, with 21 deals either completed or agreed, totalling approximately £75m.

Lambert Smith Hampton director of capital markets, Martin McCloy said the local market continues to be impeded by ongoing political uncertainty.

“It is generally accepted that the six-month extension to the EU/UK withdrawal date and preventing the UK crashing out of the EU in a ‘no-deal’ scenario was the best outcome at the end of the March for the UK and Northern Ireland. However, there is no doubt that the continuation of this period of uncertainty will continue to frustrate the investment market,” he said.

Since the EU referendum in 2016 there has been a steady decline in investment activity in Northern Ireland, with the quarterly average

of the ten quarters pre-referendum (£101m) more than a third less more than the average during the same period post-referendum (£63m)

Coupled with the lack of a Northern Ireland Executive it has led to a ‘wait-and-see’ attitude, which has created a lack of supply to the market. That being said good quality assets remain in demand, according to Mr McCloy.

“Properties with solid fundamentals will remain attractive to investors. A recent report by MSCI reported that Belfast was among the top performing UK office investment markets in 2018. Coupled with the strong office occupier market, we expect that in 2019 office investment will become the predominant asset class in Northern Ireland, over taking retail,” he added.

By Gareth McKeown

Source: Irish News

north's commercial property market
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North’s commercial property market to end 2018 in strong position

THE north’s commercial property market is set to finish the year in a strong position, according to a new report.

The latest CBRE Marketview, covering the three months to the end of September, shows solid progress, building upon record levels of take-up in the first half of 2018.

The office market added a further 105,337 sq ft across 17 transactions in the third quarter of the year, bringing the yearly total to date to 643,983 sq ft.

The investment sector has also been busy, with total spend to date this year £122.2m, boosted by the completion of a number of high-profile office buildings, including the likes of Artola House, Moneda House and River House.

CBRE office agency director, David Wright believes refurbished office properties have given a “much-needed lifeline” to the market over the last three years, given the lack of new build activity.

“There are a large number of office deals agreed and currently in ‘legals’, and providing they complete in Q4, Belfast is set to experience one of the most active years ever recorded in this sector,” he said.

Despite the positives, political uncertainties remain a concern, according to CBRE managing director, Brian Lavery.

“Lack of local government and Brexit are impacting upon pricing, but it is clear that investor appetite in Northern Ireland remains encouraging from both locals and new institutional entrants.”

“We expect the final quarter of 2018 to be a particularly busy period, which should lead to investment volumes for the full year mirroring last year’s figures,” he added

The report acknowledges the impact of the August 28 Primark fire on the Belfast retail sector, but state that the market has held up reasonably well, with activity now increasing ahead of the key Christmas trading period.

Source: Irish News