Commercial investments amounting to over £180m were brought to market in the third quarter of this year, new research has found.
CBRE Northern Ireland’s Quarterly Real Estate research report showed that almost £20m worth of commercial property deals were done, which is close to the £21m recorded in 2021.
Prominent deals completed in Belfast in the three months to the end of September include the sale of the Premier Inn, Four Corners, for £12.2m and Imperial House for £7.1m.
Although investment activity has experienced headwinds, the office sector has bounced back following the pandemic, with Belfast city centre’s recorded take-up hitting 201,974 sq ft for the year-to-date.
Whilst take-up is below the rolling five-year average, the Q3 take-up of 99,505 sq ft is approaching pre-Covid levels.
CBRE NI managing director Brian Lavery said the UK Government’s mini-budget negatively impacted commercial property in the third quarter by creating “huge uncertainty in the financial markets”.
“In Northern Ireland, we now have close to £200m of commercial investment stock on the market and the success or failure of these sales will determine the final quarter in terms of performance.”
He added: “The increase in interest rates and funding costs will invariably impact on yields. However, we do expect assets with good property fundamentals, including lease, tenant covenant and ESG credentials, to be impacted less in terms of value than most secondary assets.
“We also expect to see increased interest from international investors and potentially US outbound capital seeking to take advantage of the exchange rate arbitrage during the next quarter.”
The real estate specialist expects the office sector to continue to grow in the fourth quarter, with the recent launch of Olympic House in Titanic Quarter, Belfast Harbour’s City Quays 3, The Ewart and the completion of Paper Exchange early in 2023.
Demand has been boosted by companies seeking high quality, energy efficient offices – to meet ESG credentials, provide better spaces for clients and help them attract and retain staff – and Belfast has brought some impressive Grade A offices to the market.
CBRE NI said the number of buildings under offer and deals agreed will ensure healthy take-up in Q4 and into 2023.
Meanwhile, lettings across retail, industrial and hotels have remained active over Q3.
Demand for industrial and logistics space continues to attract much interest and, with limited space available, good quality accommodation is letting or selling quickly.
Year-to-date figures confirm that approximately 900,000 sq ft has been let or sold across Northern Ireland, with Global Point in Newtownabbey close to capacity following planning approval for the new Ardagh Metal Packaging factory and the Sensata facility.
Challenges remain in the local retail market, although Belfast city centre has experienced positive activity, with a number of units agreed for lease.
Gilly Hicks, owned by Abercrombie and Fitch, opened its first standalone Ireland store at Victoria Square and Sweaty Betty is due to open at the end of this month. In addition, Nike is seeking 6,000 to 8,000 sq ft.
November’s long-awaited Primark reopening is expected to provide a massive boost in the run up to Christmas, while the opening of Ulster University’s Belfast campus should also bolster footfall in the city’s core retail area.
Starbucks, Tim Hortons, Caffè Nero and Greggs are continuing to expand, as is grocer Lidl, which opened a new store at Castlereagh Road.
The report said the hotel market saw a strong summer of trading, with the return of international tourism and large scale music events, including Belsonic and EMERGE Music Festival, increasing leisure demand. Corporate activity was also stronger over the past few months.