Invest NI recognises the importance of available office accommodation here to supporting business growth and in attracting new investors.
We recently published a Property Research Report which examined the availability of Grade A office space in Northern Ireland, emphasising the importance of property to drive economic growth here. The problems in the property market have been well documented over the last few years. Whilst demand for Grade A office accommodation has remained relatively steady over the past three years, with limited new development taking place, the supply has fallen.
To this end and in order to stimulate the development of new Grade A office accommodation we have developed a scheme to help ensure that Northern Ireland has enough Grade A office space to meet future demand. We launched the scheme on 1 May 2015 to provide commercial loans towards the development of new Grade A accommodation and we are now accepting applications from private sector developers who meet our eligibility criteria until 31 August 2015.
In doing this we have recognised the importance of ensuring that Northern Ireland can offer potential and existing investors a variety and choice of high specification, flexible accommodation. Ultimately, it will be the private sector that will put this in place, but we hope this scheme will provide a catalyst to ensure this happens.
Contrary to a recent article that stipulated that we have limited commercial understanding of the property market in Northern Ireland, Invest NI is aware and completely understands that for property developers to provide Grade A office space, and indeed funders to support the developers, developments must be viable. Following a long period of rental stagnation, the market price is increasing. Invest NI is aware of recent transactions within Belfast city centre that have completed at more than £15 per sq ft and asking prices continue to increase. Grade A rentals are reported to have increased by 19 per cent in the past year and are now moving towards the £17/18 per sq ft required to make development viable.
Confidence is returning to the market and the increase in rental premiums coupled with announcements for new developments such as Clarendon House, Bedford Square/former Ewarts building and City Quays 2, would seem to indicate that a recovery is underway.
In addition to new office developments I am encouraged to see a number of recent commercial property reports also point to a strong interest in refurbishment projects such as at Arnott House and the Ireland Brothers building. Commercial property agents are anticipating an office space demand of approximately 1.1m sq ft spread over the next three years as lease ends come up and companies seek to move to either upgrade or enlarge their accommodation.