For quite some time now, the major talking point in Belfast’s office market has been the lack of high-quality, Grade A office stock. This is very much still the case, of course, with demand continuing to far outstrip supply.

Indeed, recent research has revealed that there are no new large floor plates (greater than 5,000 sq ft) available in the city centre – something which will no doubt have been noted by the FDI market.

While lack of supply is quite rightly attracting the headlines, another very visible market trend worth noting is the demonstrable growth in Grade A office rents that has taken place in the last year. Despite the uncertainty of Brexit, and the ongoing political and the financial challenges, the market has improved at a steady pace.

Bubbling office rental growth from early 2015 matured in 2016, with material increases now being underpinned by recent landmark lettings.

For many years, investors in Belfast office stock could only rely on variable yield shifts to generate growth in capital values, but, as a result of the new lettings through 2016, the prospect of enjoying healthier rental returns on their investments is now likely.

New office lettings in the final quarter of 2016 have moved headline rents at the top end to around £21.50 per sq ft, reflecting an increase of 25% in prime office rents in the last 12 months.

Modern office investments in Belfast are typically let on 10 or 15 year leases, sometimes with break options for tenants to exit early, but almost always with a rent review provision on a five-yearly basis to negotiate rents to market rental levels.

For many years, we had been well acquainted with the “nil increase on review”, which has meant a lacklustre, indeed almost non-existent, rent review market.

Now the tide has turned and, while tenants will not be enthused at all by the prospect of a looming rent review date, they should ensure they understand the process and mitigate their cost position. There is almost always an angle to exploit or argument to make.

However, the legal complexities of rent review mechanisms, the prospect of referral to Arbitration, and the technical interpretations, mean that it is a specialist area and must be carefully managed.

The stakes are being raised, with every new headline letting inevitably leading to conflicting landlord and tenant views on the relevance and weight of evidence.

While landlords will now be happily reflecting on the prospect of growth on review of their asset valuations, and we all can argue that a healthier functioning office market is what Belfast needs, the movement in the market is likely to come at a price for many office tenants, with substantial increases in rents on the horizon.