£175m of commercial property assets on the market
13th September 2022
Irish News 13 September 2022
Now that the summer has come to an end, the commercial property industry is back in full swing, with more than £175 million of commercial property either on the market or being prepared for sale.
The largest asset to be brought to the market is the 350,000 sq ft Rushmere shopping centre, along with the adjoining 135,000 sq ft retail park in Craigavon. The quoting price of £57m reflects an overall yield of 12 per cent and is likely to be one of the largest single assets to be sold in 2022.
Other significant assets either on the market or being prepared for sale, include the 135,000 sq ft Waterfront Plaza – the former home of PWC in Belfast.
The building is being offered with vacant possession and will require significant skill and imagination from potential buyers given the sluggish office occupation market.
As for straightforward office investments, the 57,000 sq ft Klondyke headquarters building in the Gasworks has been brought to the market with an asking price of £10m and a government tenant that has been in occupation since 2007.
The home of KPMG in Belfast, the 90,000 sq ft Soloist Building, has also been brought to the market with a price tag of £35m and an initial yield of 5.5 per cent.
The 85,000 sq ft office and retail investment, Bedford House, is also being prepared for sale, as is one of Northern Ireland’s first ever covered shopping centres – the 280,000 sq ft Ards shopping centre.
On the industrial front, one of the largest industrial assets to be brought to the market in recent years is the 830,000 sq ft former Michelin factory in Mallusk – Central Park. The park represents a unique opportunity to acquire a substantial industrial complex in an excellent location on the outskirts of Belfast.
While the price tag of £16.5m would appear to be strong for an asset of this size and age, we expect there to be good demand from cash-based investors in a sector where demand is robust.
The significant uplift in availability of commercial property investments has in no small part been driven by increasing inflation and bank interest rates.
Debt based investors have seen bank base rates increase from 0.5 per cent 12 months ago, to 3.3 per cent in August. When their facilities are renewed this will have a significant impact on cash flows.
The deteriorating economic backdrop will undoubtedly create opportunities for savvy property investors.
Investors who are not relying on debt will be able to purchase best in class assets which have not been available in the low interest rate environment we have experienced over the last 10 years.
The outlook for commercial property assets, particularly for those who want to hedge against inflation, remains strong with the star performer being the industrial sector where there continues to be significant levels of growth in both rents and capital values.