A friend who runs a growing business is, this year, seeking to purchase a Commercial property in Northern Ireland. After seven years of leasing and now having built up significant cash reserves, he is actively pursuing a sizeable modern office building. He certainly won’t be alone in taking the plunge over the coming months. Aside from the international investors attracted through the various loan book sales last year many indigenous companies, who may have been sitting on the fence, waiting for the economy to shift forward, will re-enter the market in 2015.

What do you need to know about the property market?

If you’re considering dipping your toe into the commercial property market for the first time here are a few pointers. Whether you plan to lease or buy, commercial property is very different to the residential world and there are many ‘trip wires. Historically the costs associated have ensured that it was usually only those with the deepest pockets that could pursue the bigger investments.

But things have changed. Prices have shifted considerably and believe it or not yes, the banks are once again seriously looking at backing local investors who can provide a sound business case. Office capital values relevant to my friend above and the SME world generally are on the move from the lowly levels experienced in recent years.

This movement seems to be stimulating institutional interest. Because of the lack of Grade A office space in the Belfast market, it is comforting to note that the banks have been relatively approachable in the recent acquisition of several sites/development opportunities.

In appraising such opportunities rent can be a fundamental point to consider which is largely dictated by location. There are however other important aspects to be considered and leveraged in building the business case. Up until recently, office rents in Belfast have been stubbornly averaging £12.50 psf but I expect significant uplift on these figures across the next 18 months as the market continues its recovery.

Location as factor

Whilst location is important to owner-occupiers, an investment location will also be of interest to your tenants. For example, a retailer will want to be in an area of high footfall while a technology company may be content to be located out of town providing there are strong transport links for employees and parking.

Most importantly, when purchasing or leasing in the commercial market taking professional advice is always prudent.

Best wishes for 2015 to all new and not-so-new investors.

David McNellis is a director with Belfast-based commercial property agency Lisney, which works on behalf of many of Northern Ireland’s most significant investors and developers as well as major retailers and businesses.