47 new office buildings – totalling over 4 million square feet – could be delivered in Belfast over the next five years, according to a study undertaken by property consultants, Savills. This would be enough space to accommodate over 40,000 office employees.

Savills note that 9 office developments – comprising 618,000 sq. ft. – are currently under construction or major refurbishment in Belfast. 396,000 sq. ft. of this space is already reserved. Furthermore, there are 20 developments that have received planning approval but are not on site, while up to an additional 18 are in the planning or pre planning stages.

The majority of this proposed development (73%) is focused in Belfast City Centre and designated development zones in the Titanic Quarter and City Quays, reflecting Belfast City Council’s policy and focus on regenerating the City Centre.

Simon McEvoy, Head of Office Agency at Savills Belfast commented:

“New office construction and refurbishment in Belfast came to a complete halt as a result of the economic downturn and, with 1.2 million sq. ft. of take-up in the market since the last new office completion in 2012, we are now faced with a chronic under-supply of Grade A stock, which is currently sub 2% and falling.”

Office take-up in Belfast will reach 400,000 sq. ft. in 2016 – a 30% increase on 2015. As a result, demand is outstripping supply, with prime office rents increasing by 25% in 2016 – from £16 to in excess of £20 per sq. ft. – the fastest rate of rental growth in the UK and Ireland. However, despite the increase, Belfast has the lowest cost base of any regional centre.

Mr McEvoy commented:

“The lack of quality supply has long been discussed, however, the market lacked faith in the latent occupier demand and the potential for rental growth to reach levels to support new development. Now – as evidenced by the increase in planning applications – development has become viable again.”

He continued:

“Although the pipeline figures look high, not all of these developments will proceed. The reality is that despite the demand/supply imbalance, the current pipeline is severely constrained by available equity and debt funding, with some requiring a pre-let to get out of the ground. As a result, there is little chance of us reaching a point of oversupply any time soon.”

Contrary to the negativity surrounding Brexit and the US election result, Savills believe that Belfast will continue to serve as an attractive location for existing occupiers to grow, and new international businesses to locate. This is evidenced by occupier demand in the market being largely unaffected by Brexit, with occupiers such as Rapid 7, Deloitte, KPMG, Axiom Law and Tullett Prebon continuing without any change to their requirements for new office accommodation, and further announcements of new entrants from the US and UK such Black Duck & Moo.la.

Savills have also noticed an increase in cross border enquiries with companies interested in bi-locating in Dublin and Belfast. Rapid7 the Boston Headquartered Internet Security firm are a prime example of this bi-location model. In 2015, Savills acted on their behalf in simultaneously acquiring new offices in Dublin and in Belfast of 6,000 sq. ft. and 11,500 sq. ft. respectively. Both locations have proven a great success and they are due to sign imminently on a further 6,000 sq. ft. in Belfast which would facilitate a headcount of up 170 people.

Mr McEvoy concluded:

“The attractive fundamentals of Belfast, such as low occupancy costs, low labour costs, access to highly educated and skilled workforce, affordable high standard of living, excellent healthcare and education, proximity and connectivity to London & Dublin, have not changed”