250 m 250 million of investment property currently on the market. 235k. 1.7% Growth in UK highstreet footfall in Q k

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Andra Lamb
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1 Quarter 1, 2017 The Market in Numbers Q 1 THE LISNEY BELFAST COMMERCIAL PROPERTY REPORT Investment Office 250 m 250 million of investment property currently on the market 235k sq ft Space set to be delivered in Belfast City Centre throughout 2017 Retail 1.7% Growth in UK highstreet footfall in Q Industrial The Difference 190k sq ft Notable transactions during Quarter 1, 2017

Investment The effects of the lead up to the Brexit referendum and the result that followed saw investors pause and contemplate what impact such an outcome may have on the economy and in turn the

2 Investment The effects of the lead up to the Brexit referendum and the result that followed saw investors pause and contemplate what impact such an outcome may have on the economy and in turn the investment market. As a consequence, investment levels were constrained, reaching 213m in compared to 420m in That downward trend has continued into Q1 this year with less than 10m transacted. However, the outlook is more positive with c. 250m on the market and c. 60m of that agreed for sale. The relative slow down to the end of last year is not NI specific with sellers in the UK hesitant about going to market until there was more certainty about liquidity, however gradually investors are taking comfort in numbers and we expect volumes to grow substantially in the latter quarters of the year. There are several key macro considerations for investors which will assist in growing confidence in the wider economy. The Northern Ireland Composite Economic Index (NICEI) results show that NI economic activity was estimated to have grown by 0.3% from Quarter 4 to Quarter in real terms. The index also increased by 2.4% in real terms between Quarter 1 and Quarter Over the last two years annual output increased by 1.9%. The Ulster Bank purchasing manager s index echoes this positive position with all four sectors posting increases in employment, stating this is in line with the launch of new products and efforts to expand operations. Million (Sterling) Strabane Retail Park 140m 120m 100m 80m 60m 40m 20m Investment Volumes, Q1 - Q m Q1 13.5m Q2 In a property context the narrative is equally positive, NI property values are generally re-based following our period of recession. Rent and capital values across several sectors sit sustainably lower than their peak of 10 years ago and we have begun to see the return of institutional investment activity, both important indicators in relation to the longer term sustainability of our market. 45m Q3 40m Q4 8m Q On The Market, Q Property Details Pricing Castlecourt Shopping Centre 340,000 sq.ft. Covered Shopping Centre c. 125m Bombardier, Doagh Road, Monkstown 430,000 sq.ft industrial facility 19.5m/7.1% Vodafone Upper N ards Road 13,500 sq.ft. self-contained office 2m/8.4% Laharna Retail Park Retail Park extending to 48,000 sq.ft. 5.78m/ 8% Page 2

Investment Notable Transactions, Q1 2017 Property Details Pricing Status Strabane Retail Park Open consented retail park extending to 23,300 sq.ft. 3.

3 Investment Notable Transactions, Q Property Details Pricing Status Strabane Retail Park Open consented retail park extending to 23,300 sq.ft m/8% Agreed - Private Investor Next, The Diamond Coleraine 8,000 sq.ft. High Street Retail let to Next with short expiry 1m/12.8% Sold - Private Investor Iceland, Antrim Road, Belfast 7,825 sq.ft Roadside Retail Let to Iceland 1.31m/7% Sold - Private Investor Office The NI office market endured a slow start to 2017 with HCL Technologies letting of c. 13,000 sq. ft. in Millennium House representing the only notable transaction in a Quarter which saw take-up levels reach just 18,000 sq. ft The driving factor behind such figures is a continued lack of Grade A space which has only further diminished over the previous 12 months when 535,000 sq. ft. transacted. Available stock has yet to be replenished so demand will continue to outweigh supply in the short term, however we are aware of a number of projects set to deliver space in This will go some way to alleviating the supply gap while the development pipeline gathers momentum. Millenium House on Great Victoria Street Refurbished space continues to account for the majority of Grade A stock with City Quays 2 set to be the only new build office accommodation delivered in 2017 which is not already pre-let. Headline Rents Headline Rents, Q Rent /PSF Page 3

4 Office The Maysfield developments currently under construction on behalf of Concentrix (130,000 sq ft) and All State (140,000 sq ft.) which are set to be completed later this year will see the largest take up of space in recent years, however this will do little to alleviate the pressure on current levels of demand. These Maysfield developments are examples of our market not meeting larger requirements meaning design and build projects are often the only viable option for larger occupiers. We are aware of a number of other requirements which are yet to be met for occupiers such as HMRC, BBC and Deloitte. This places even more importance on the more significant refurbishment projects but more so on the speculative builds which are currently making their way through the planning process. Work is well underway at the two developments at Maysfield Space Set To Be Delivered in 2017 Builder Address Size (Sq Ft) Flax House Adelaide Street 28,598 Longbridge House Waring Street 20,000 Weaving Works Alfred Street 24,500 Adelaide Exchange Adelaide Street 57,000 Clarence Street West Clarence Street West 9,560 City Quays 2 Clarendon Dock 45,552 Northern Court Gloucester Street 13,785 Mays Chambers May Street 11,361 Lesley Buildings Fountain Street 12,000 State Buildings Arthur Street 13,000 Total 235,356 Page 4

5 Retail After a strong finish to with most retailers hailing a successful Christmas, high street footfall grew 1.7% in Q1. Cooling consumer confidence and rising inflation was offset by increased cross border trade driven by the weak pound with shoppers from Republic of Ireland bargain hunting north of the border. Retailers continued to look for opportunities to expand their portfolios across Northern Ireland, with Belfast seeing the lion s share of letting activity in Q1. Débutantes in the market have included Southern Irish retailers Newbridge Silverware opening on Arthur Street and EZ Living setting up shop at Boucher Retail Park and as expected the food and beverage operators continue to expand with new openings for Prezzo, Burger King, Starbucks, Greggs and Freshii. Although there are signs that the food operators aren t having it all their own way, with Slims Healthy Kitchens entering administration after a period of rapid growth resulting in the closure of 5 stores. Despite the majority of activity in Q1 being in Belfast there are a number of retailers with Newbridge Silverware s New Store on Arthur Street requirements for stores in strong regional schemes and we anticipate more provincial deals, especially in the border towns, in the coming months. Retailers such as Specsavers, Holland & Barrett, Skechers, Smiggle, B&M, The Range and others are in active negotiations on a number of sites. Despite the headwinds of uncertainty we are optimistic that the retail occupational market will continue to perform well throughout Notable Transactions, Q Trader Transaction Centre Location Superdrug Letting Bloomfield SC & RP Bangor The Works Letting Bloomfield SC & RP Bangor Poundstretcher Letting DeCourcey Centre Carrickfergus EZ Living Letting Shane Retail Park Belfast Airtastic Letting South Circular Retail Park Bangor Skinny Kitchen Letting Boucher Centre Belfast CEX Letting Town Centre Cookstown Specsavers Letting Town Centre Cookstown Greggs Letting Twin Spires Complex Belfast Starbucks Letting Connswater Belfast Sports Direct Store Opening Donegall Arcade Belfast Prezzo Letting Boucher Square Belfast Burger King Letting Holywood Exchange Belfast Newbridge Silverware Letting Arthur Street Belfast Page 5

Industrial Following on from a positive where the yearly uptake continued to increase on a year to year basis, Q1 in 2017 appears to be following this trend with strong demand for space.

of a new facility just over the border in Dundalk.

6 Industrial Following on from a positive where the yearly uptake continued to increase on a year to year basis, Q1 in 2017 appears to be following this trend with strong demand for space. A number of local companies are feeling insecure following the activation of Article 50 and the UK s planned exit from the European Union, to include the recent announcement by Almac on the opening of a new facility just over the border in Dundalk. CDE Global announced it would build a multimillion-pound office complex in Cookstown which will be capable of accommodating 400 staff, with planning permission secured and construction started. A number of larger properties have sold to include 63,000 sq ft at Drumahoe Industrial Drumahoe Industrial Estate, Larne Estate, Larne and a 56,600 sq ft building on Hillview Road in Belfast. A large production facility with various units on Lissue Walk in Lisburn received good interest with a self-contained unit of 25,000 sq ft being let to Decora. Channel Commercial Park in Titanic Quarter continues to prove popular with a further 2 lettings totalling c. 32,250 sq ft being achieved. Drumahoe Industrial Estate, Larne Headline industrial rents for existing stock in good locations are achieving over 4 per sq ft with capital values reaching 45 per sq ft and demand from owner occupiers looking to purchase still very strong. Notable Industrial Transactions, Q Location Size (Sq Ft) Type 766 Upper Newtownards Road, Dundonald 12,229 Lease Titanic Quarter, Belfast 16,050 Lease Titanic Quarter, Belfast 16,191 Lease 1 Lissue Walk, Lissue Industrial Estate, Lisburn 25,000 Lease Hillview Road, Belfast 56,600 Sale Drumahoe Industrial Estate, Larne 63,000 Sale Total 189,070 Page 6

In Focus The Folks On The Hill Our Offices Nobody would question the challenges Northern Ireland has faced in the almost decade since the property crash and the events of 2007/2008 continue to cast a

The cautious optimism that permeated 2015 and is now transitioning into real opportunity and month on month confidence levels continue to be buoyed.

Brexit vote. It is no secret that the hospitality sector is in a period of rapid growth and long awaited hotel beds are no longer a pipe-dream but an upcoming reality.

Add to this increasing student accommodation across the city alongside the development of the new University of Ulster campus and maybe not enough, but at least some, desperately needed Grade A

Indeed, the recent announcement of plans for a 400m regeneration of the 16 acre former Sirocco Works site in east Belfast and the potential of the 5,300 jobs it will create as a modern, mixed-use

Stormont, as we move forward, can clearly represent the economic, social and political interests of Northern Ireland at even the local, never mind the UK and European level.

thing we need, particularly as we re at last gaining positive momentum.

7 In Focus The Folks On The Hill Our Offices Nobody would question the challenges Northern Ireland has faced in the almost decade since the property crash and the events of 2007/2008 continue to cast a lengthy shadow. That said as a shadow lengthens it fades and almost 10 years on the future is at last looking somewhat brighter. The cautious optimism that permeated 2015 and is now transitioning into real opportunity and month on month confidence levels continue to be buoyed. Significant projects are coming online in Belfast, there are once again cranes across our skyline and the city is starting to show the real signs of life despite concerns last year in the wake of the Brexit vote. It is no secret that the hospitality sector is in a period of rapid growth and long awaited hotel beds are no longer a pipe-dream but an upcoming reality. Retail is continuing to show extremely positive signs and every day it seems another big-name brand is setting out their stall to take advantage of the pounds in the NI shoppers pocket. Add to this increasing student accommodation across the city alongside the development of the new University of Ulster campus and maybe not enough, but at least some, desperately needed Grade A office accommodation coming available and you can see boundaries being redefined and long awaited regeneration taking place. Indeed, the recent announcement of plans for a 400m regeneration of the 16 acre former Sirocco Works site in east Belfast and the potential of the 5,300 jobs it will create as a modern, mixed-use development with city centre offices, homes and leisure facilities is developed backs up the argument that the city has a lot more to give and investors are prepared to take advantage of the opportunities Belfast has to offer. That said, investors work by assessing risk and reward, and recent political uncertainty caused by the snap election following the breakdown of the assembly did little to instill confidence that Stormont, as we move forward, can clearly represent the economic, social and political interests of Northern Ireland at even the local, never mind the UK and European level. A functioning power-sharing administration is a key factor in ensuring economic stability and moving forward, as we come out of a period of prolonged depression, any lack of stability is the last thing we need, particularly as we re at last gaining positive momentum. Let s not forget the many by-products of economic growth; FDI may create jobs but we have to be sure our workforce is skilled to meet the demands of incoming industries, effective infrastructure is required to get our up-skilled workers to and from their workplaces and let s not forget people need places to live. Infrastructure, education and housing are all issues that need to be addressed at government level and there is an expectation from those who have, and those who may, invest in the province that or government get back to governing and tackle these. BELFAST Montgomery House, Montgomery Street, Belfast, BT1 4NX T: E: belfast@lisney.com DUBLIN St. Stephen s Green House, Earlsfort Terrace, Dublin 2 D02 PH42 T: E: dublin@lisney.com CORK 1 South Mall, Cork T12 CCN3 T: E: cork@lisney.com LONDON 33 Cavendish Square, Marylebone, London United Kingdom, W1G 0PW T: E: london@lisney.com The Lisney Northern Ireland Commercial Property Team Declan Flynn Managing Director David McNellis Director (Agency) Gareth Johnston Director (Professional Services) The Lisney Research Team Nicky Finnieston Director (Retail & Investment) Stephen Chambers Associate Director (Investment) Andrew Gawley Associate Director Lisney Northern Ireland Jonathan Haughey Surveyor Chris Campbell Marketing Manager lisney.com

LISNEY BELFAST COMMERCIAL

Quarter 3, The Market in Numbers Q 3 THE LISNEY BELFAST COMMERCIAL PROPERTY REPORT 199 m 199 million of transactions during Q3 91.5k sq ft Take up throughout Belfast City Centre in Quarter 3, Retail 150