Speculative office building started in Belfast in a meaningful way for the first time in more than a decade during 1999 with agents anticipating a continuation in the rise of rental levels for prime new accommodation.
Office rental levels, which had been stagnant since the 1980s, began to climb for the first time at the start of the year with £12 sterling per sq ft being achieved for new office space in the Laganside area.
At the end of the year, agents were confidently predicting new levels of £13.50 and £14 being achieved for two speculative office buildings in the city centre. Both buildings are around 150,000 sq ft.
Dunloe Ewart is building a fully air-conditioned building at Lanyon Place, in the Laganside area, and McAleer and Rushe is building Millennium House, in Great Victoria Street.
Rental levels in the office sector are still good value in UK terms and are around half prime levels in Dublin. This, and a ready supply of local English-speaking staff, has attracted call centre operators to the North, helping to stimulate the office market.
The largest single office letting achieved in the North took place towards the end of the year when the Halifax group agreed to rent a 150,000 sq ft building at Cromac Wood, on the site of the old Belfast Gas Works. The building, being developed by the local CUSP group, is due for completion in 2001 and between 1,500 and 2,000 people will be employed in the Halifax call centre.
It is anticipated that the office uptake in 1999, including the Halifax deal, will be around 490,000 sq ft compared with the 1998 figure of 310,000 sq ft. Commenting on the office market, in a recent report, Hamilton Osborne King said: "The increase of high quality, newly built stock is likely to result in a lot more poor quality, second-hand accommodation becoming vacant.
"The recent announcements regarding call centre lettings can only serve to reinforce optimism.
"Whereas, generally, in recent years the market has been somewhat tenant orientated with moderate rent increases and flexible leases terms, market indicators suggest that the advent of the millennium could swing the pendulum to favour local landlords.
"The local economy is still in a growth phase and with demand remaining high and a healthier political outlook, landlords and agents can look to the future with optimism."
Developers and commercial agents are, meanwhile, looking forward to changes emanating from the newly devolved government at Stormont on planning and disposal of public land issues.
Developers have complained that the planning system has virtually ground to a halt in the North in respect of out-of-town and edge-of-town retail and office developments. A number of major retail schemes have been held up for three years or more without any decision from the planning authorities under the direct-rule government system.
The developers and agents are also anticipating early progress on a decision on the disposal of the 1,200 acres of land in Belfast Harbour. Disposal of this land would provide huge development potential.
The Laganside Corporation has already indicated it would be interested in extending its borders to land at Queen's Island, where the Titanic was built, for possible mixed residential and office use.
Agents report that the investment market has continued to hold up well despite the movement of large sums across the Irish Sea to better-performing markets in the north of England and Scotland.
The largest land deal completed in the North was the sale of the 26-acre Sirocco Works site with a 900-feet frontage on to the east bank of the Lagan, close to the Waterfront Hall and Central Train Station. Dunloe Ewart acquired the site in October for a price understood to be around £23 million. Richard Ellis Gunne acted as agents for the vendors.
Lambert Smith Hampton acted in the sale of the Richmond Shopping Centre in Derry, which achieved £22 million, and the Flagship Shopping Centre in Bangor, which achieved £14.8 million.
The same agency bought Northcott Shopping Centre in Glengormley, four miles north of Belfast, for £1.35 million. It was acting for a private investor.
There were also increases in the prices of city centre sites. Prime sites which had stood at a level of around £1 million in recent years began to fetch more than twice that.
Interest came from developers of both office and apartment schemes, as urban living began to be come a feature of the local market after almost three decades of Troubles in which the city centre emptied of inhabitants.
The city centre retail market remained somewhat stagnant during the year due to the lack of product but agents report Zone A levels in the prime Belfast streets reaching around £200 per sq ft. In one of the few recent deals, Vero Moda took a 2,252 sq ft unit in the Castlecourt Shopping Centre, in Belfast, at a rental of £92,500.
