OFFICE SPACE: DEMAND STILL STRONG AS FLAGSHIP BUILDINGS ENTER THE MARKET
10 May 2023
Osborne King is marketing three major city centre office buildings in Belfast, each with a different investment appeal and potential buyer. Directors Richard McCaig and Gavin Clarke look at the current demands in the market and why there’s still interest in office-based bricks and mortar.
The tune is beginning to change in terms of how we use our office space across Belfast and beyond.
Just a couple of years ago the “end of the office” was a phrase doing the rounds. However we only need to look at the improving levels of take up and strong levels of rent to understand the ‘new’ office market.
“There is still activity and a good story here,” Gavin Clarke, director, Osborne King says. “What we have seen is people taking the view that the market has become more consistent and there are office requirements.
“You are seeing a focus on buildings which have 5,000 to 10,000 sq ft floorplates – whether that is upsizing or downsizing.”
Osborne King is currently marketing three major city centre offices. That includes the Klondyke. It’s a 57,584 sq ft landmark listed building in The Gasworks area of the city centre, and occupied by the Northern Ireland Environment Agency. It’s now on the market for offers over £8m and takes in a net rent of just over £900,000 a year.
It features a glazed reception lobby, double height loft-style roof in a significant portion of the office space, suspended ceilings in the modern sections with floor to ceiling height of 2.7 metres and attractive use of feature red brick throughout.
“It’s definitely a trophy building because of the nature of it – with strong features and touches like the vaulted ceilings,” Richard McCaig, director, Osborne King, says.
“There’s a modern story there behind an older listed building – located opposite some newer apartments, and James House, which has undergone a lot of investment. So, there’s a lot happening in that area.
“There are still plenty of local investors with good trading businesses which would have the levels of funds to buy buildings such as these.
“In the office investment market the opportunity is to be able to secure very good quality tenants.
“What has always been consistent is the quality of the tenants you can attract. The sector has become more of a partnership between the landlord and the tenant.”
It’s now being marketed as a strong investment opportunity for refurbishment and redevelopment.
“The upper floors are now vacant and there’s a selection of restaurant and retail on the ground floor,” Richard says.
“There’s also been a lot talked about recently around repurposing buildings. The office sector has changed a lot in the last three or four years. There’s an opportunity to repurpose a building such as this into hotel, retail or leisure.”
Lindsay House comprises 33,884 sq ft of upper floor offices and ground floor retail, which includes tenants Subway, Tribal Burger and Sew ‘n’ Sew.
Gavin says there’s a move towards both hybrid working and companies wanting their staff back into the office full-time.
“We are seeing a move back to people being more comfortable in the office. There’s a level of flexibility that employers will have to take on board but you can see the city is getting increasingly busy.”
And the Metropolitan Building is another prominent city centre office property on Alfred Street, also being marketed by Osborne King, which is now on the market for £3.3m.
It’s fully let, with five years remaining on the lease, to to Oval Insurance Broking Ltd, with part of the building being sub let to Atos.
“This property is fully let so you have that income coming in each year. It’s a strong office investment,” Richard says.
Looking towards the wider market, Richard says “landlords who engage fully with their tenants will reap the benefits”.
“With those owning several buildings they can have a 10 person US start-up and then as they grow into a 100 or 200 person company move them to another space.
“They want to have happy staff and get people into buildings. It’s about getting the best talent in and many people want to be in the office, certainly part of the week, and that’s a natural driver.”
Gavin says: “The majority of the offices are still owned by locals and recent sales have been to Northern Ireland individuals or companies.
“The market is still there. It’s location and position driven. If you have something at Donegall Square or close to the city centre, it will go and there will be some bidding.
“The other factor is value – because there is a lot of money still in Northern Ireland, there remains an appetite locally, which means prices are still strong.”
But it’s also wider UK interest in investment which is coming to the fore here, according to Richard.
“They are looking for genuine opportunities to invest in Northern Ireland,” he says. “That can only help – it brings more money in, and it increases the quality of property. There are those out there who are ready and willing to invest.”
But Richard says a lack of political stability continues to be an issue for some of those looking towards the market here.
“To maximise our potential and attract inward investment we need stability and the Stormont government not sitting is one which is mentioned time and time again.”