A commercial property report has warned that without decisive political impetus, the Northern Ireland market will continue to face significant challenges.
CBRE NI’s Q2 2023 Report has highlighted the impact slow Governmental decision-making is having on progressing development and attracting potential occupiers and investors.
Brian Lavery, Managing Director at CBRE NI, said:
“Last quarter, high hopes were pinned on the Windsor Framework to unlock investment opportunities in Northern Ireland, particularly across the commercial property sector. We are however still waiting for that key to turn, and the absolute need for national and local government impetus to drive development and attract potential occupiers and investors cannot be overlooked.
“The slow pace of decision-making in Northern Ireland is also impacting the Office market with below average take-up figures in the first six months (150,000 sq. ft. of lettings) of 2023.
On the flip side of the coin, the Serviced Office sector is benefitting from this occupier hesitancy and is operating at near full capacity.”
Further findings of the report include:
- Whilst an influx of second-tier office space is anticipated in the coming months, extensive investment will be required for this stock to meet current ESG standards.
- Despite no continuous pipeline of new development, demand within the Industrial and Logistics market has remained strong with any new units becoming immediately occupied. Availability of suitable development sites will be critical for the market within the next 10-20 years.
- Retail Parks, where we continue to see near full occupancy, are the highlight of the Retail sector. Demand from Food and Beverage operators remains ongoing with both new and established outlets very active in the pod and drive-thru field.
- Increased letting activity in Belfast City Centre has been driven by the reopening of Primark which has led to both Accessorize and Clarks Shoes and Footwear relocating to Donegall Place.
- Investments totalled £27m in Q2 bringing the half yearly total to over £155 million. The biggest transactions of Q2 were the sale of Bedford House and Tesco’s Belfast distribution unit.
- More than £80 million of investment opportunities were brought to market throughout Q2. Most notably Forestside Shopping Centre (quoting £37m) and Foyleside Shopping Centre (£34.25m), both of which are expected to transact in Q3.
The report highlights a significant development in the residential market with the completion of The Loft Lines Build to Rent scheme in Belfast’s Titanic Quarter. This pioneering project represents the first of its kind in the city and upon completion will comprise 627 Build to Rent residential units and 81 Social and Affordable homes presenting a new, sustainable way of living for people of all ages, incomes and occupations.
Mr Lavery continued:
“In recent years we have witnessed the success of the purpose-built student market, and we would now expect an increase in Build-to-Rent activity experience the same growth within the Residential and Investment markets.
“The Loft Lines deal – which will see a community built from the ground up in the heart of Titanic Quarter – is without question the most positive development in the residential market that we have seen for some time
“This type of purpose built, people-led community is the future of city centre living and we anticipate The Loft Lines to be only the first of several developer led residential projects here.
“Advised by CBRE, Legal & General Forward-Funded this scheme and we are very proud to have played our role in establishing Belfast’s first residential led Build-to-Rent venture.”
The Loft Lines scheme is scheduled to complete in 2025 and will support the city’s goals of addressing the housing crisis and delivering 31,600 homes in Belfast City Centre by 2035.
Mr Lavery concluded:
“Looking ahead the opportunities for the market are clear, particularly within utilisation and modernisation of city centre Office stock and development within the Industrial sector.
“Interest, investment and development are however required to achieve this, and those keys remain firmly in the hands of our Governments.”
The full report can be viewed here.