Slow government decision-making is hindering the commercial property market in Northern Ireland, hindering development and investment, the CBRE’s NI Q2 2023 report has found.
As it stands a number of city centre public sector offices are sparsely occupied. An influx of second-tier office space is anticipated in the coming months, though extensive investment will be required for this stock to meet current ESG standards.
Brian Lavery, managing director at CBRE NI, said: “The last quarter we heralded the agreement on the Windsor Framework with the hope that it would unlock investment in Northern Ireland generally and specifically the commercial real estate market.
“Unfortunately, nothing moves at a fast rate in Northern Ireland, and we still await national and local Government impetus to facilitate development and interest from potential occupiers and investors.
“The lack of occupier decision making has adversely affected the Office market where a total of only 150,000 sq. ft. of lettings in the first six months means we are well below our usual take-up figures.
“Potential office tenants are still slow to make decisions on relocations and start-ups. Although a beneficiary of this uncertainty has been the serviced office sector which is running at near full occupancy.”
Retail parks, which are at near full occupancy, is 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.
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.
Lavery added: “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.
Lavery said: “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.”
