Office space shortage and investor interest drive market

With rental levels for prime office space almost half those being achieved in Dublin and strong tenant interest, particularly in back-up and call-centre areas, agents are reporting a growing belief the city is on the verge of a development boom.

In contrast with Dublin, the Belfast office market has virtually stood still since the 1970s, with rental levels for new space in Belfast hovering around £10 sterling per sq ft and only recently reaching £12. Now agents are predicting growth to £14 to £15 in the next two years, compared with the averages in Dublin of £25 to £30.

Until recently, the only offices being built in Belfast were done to order, with the public sector taking most space in the 1970s and 1980s. Large-scale private take-up is relatively new in Belfast. But, like Dublin, there is a shortage of speculatively-built offices and signs of pent-up demand. This, together with an influx of Southern investment and development money, is stimulating the office market and causing a knock-on rise in the prices of prime sites.

The entry of Dublin investors and developers is mainly due to the drying up of development opportunities in Dublin, and the Northern Ireland peace process which has created a climate where Southern property people feel safer about moving their money into the North.

The North has also escaped the downturn and uncertainty that has affected the commercial property market in the south of England.

The effect of massive regeneration in the Laganside area has also greatly contributed to the sense of optimism in Belfast. The biggest single office development in recent times has been the forward purchase by British Telecom of the 160,000 sq ft BT Tower in Lanyon Place. Other major office lettings in the Laganside area have been the 58,000 sq ft pre-letting to Abbey National in Mays Meadow (by a Southern developer); Prudential's letting of a 52,000 sq ft building at Clarendon Dock; and All State Insurance's letting of 39 Corporation Street at a rental of £12 per sq ft.

The North has one of Europe's most advanced telecommunications networks and is on the rise as a location for call centres.