Uncertain political climate presents difficult backdrop for commercial property sector

Releasing its Commercial Property Report for the first quarter (Q1) of 2019, the firm said that despite a modest level of investment transactions so far this year, the lack of progress on either Brexit of the restoration of the Executive continued to hamper investment from outside the province.

A total of £41 million 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.

“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,” said Lisney Northern Ireland managing director Declan Flynn.

“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.”

Notable investment transactions during the quarter include the sale of James House at The Gasworks for £14m and Donegall House on Donegall Square in the city centre for £9.6m.

The report adds that £52m of investments marketed for sale in Q1 are now noted as ‘sale agreed’, including Gateway Offices in Titanic Quarter, Timber Quay, Londonderry and Antrim Business Park.

More than 106,000sqft of office take up was reported in Q1, but immediate availability of Grade A office space within Belfast remains limited at less than 200000sqft spread across a number of buildings.

Prime retail locations in the city centre are achieving rents of £150 per square foot and discount retailers continue to be amongst the most active within the sector

The report adds that demand for industrial/logistics space is being driven largely by owner occupiers and notes that 532 new jobs announced in the industrial and logistics sector is set to prompt movement through expansion or relocation.

“2018 was a record-breaking year for office take-up locally which totalled 885,000 sqft, said Mr Flynn.

“Unsurprisingly the take up in the last three months, across 14 transactions, is less than take up within the same period last year at 270,310sqft, 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.”

In the retail sector, he said that, across the UK, it had 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 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 26,000sqft site at The Junction.

“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.”