Key findings

Market summary

New starts in 2022 were spread across residential, student accommodation, retail/leisure, and office indicating some change to previous years. The two office new starts in 2022 are the joint fewest recorded in the Belfast Crane Survey to date, while the two residential new starts in this year’s survey are the first since 2019. Hotel development continues to be muted – just one development has commenced since 2018. There are positive signs for the industry including compelling evidence that visitors have returned in force and are sustaining the current hotel stock. Given significant City Deal investment lined up for Belfast Stories and visitor experiences in the wider City Deal Region (e.g., Carrickfergus Castle), as well as signs of improving air connectivity, the prospect of additional hotel development in coming years is growing.

While the number of office new starts was fewer than typical in 2022, it was a bumper year for completions with 571,000 sq. ft. of office space constructed. There is uncertainty over uptake. This has occurred as a result of shifting working patterns and the increasingly challenging economic climate across the UK. These factors are likely to have an impact on the prospects of speculative schemes progressing in the near future.

The Deloitte Economics Monitor is forecasting a record contraction in UK household disposable incomes per person in this fiscal year (2022 - 23) and next (2023 - 24), with the UK economy now officially in recession. With high interest rates, high global energy prices and supply side challenges, the economic recession will potentially have the greatest impact on office development, at a time when many organisations are already considering their office and estates strategies. That said, it is likely that all sectors will witness some slowdown in investment. Undoubtedly, the lack of the Northern Ireland Executive and Ministers at the time of writing, does not build certainty or confidence for those who may be considering investment.

While there were no education new starts in 2022, Belfast is increasingly focused on its two universities. Over 1.4 million sq. ft of education space has been created in the city since 2016, in addition to over 4,000 student rooms (with 1,850 more under construction). While Ulster University has had a presence north of the city centre for a long time (the College of Art dates back to 1849), the big story in the city centre this year is the arrival of an additional 15,000 students and staff to the new Ulster University campus on York Street.

University campuses as bookends

From a bird’s eye view of Belfast’s city centre, Ulster University and Queens University are almost equal distances north and south of the City Hall. Together they bring over 40,000 students and staff into the heart of the city. Now add in Belfast Metropolitan College with its multiple campuses, the largest of which is in the Titanic Quarter. Collectively these educational institutions and their student populations are key to the future of the city centre.

The universities and associated student population have had a profound impact on local population and development activity in Belfast. While the biggest single story may be the opening of Ulster’s £370 million campus on York Street, Queens have had an active capital programme with eight education projects recorded in the Belfast Crane Survey since 2016. They total over 500,000 sq. ft of space, with student accommodation provision as part of an ongoing Capital Development Programme valued at over £700 million. This academic year saw the opening of Queen’s Student Centre, while another development at Riddell Hall is to be completed in 2023. Since 2016, almost 6,000 student accommodation rooms have been constructed, or are currently under construction, across Belfast and are driving the population of the city centre. Almost half are in the vicinity of the Ulster University campus with others dotted across the city centre.

Some students were already living, commuting, and shopping in the immediate vicinity of the Ulster campus, given the build-up of student accommodation stock in the years leading up to completion of the university building itself.

Evidence shows that many students in the new accommodation adjacent to Ulster University are studying at Queens, while many Ulster students stay south of the city centre. The completion of the campus and additional student accommodation has emphasised the emergence of a north-south corridor in the city bookended by both universities. This channel is likely to be bolstered by the north-south Glider expansion announced in autumn 2022, which will streamline public transport across the city and through the city centre.

The movement on this corridor requires reliable and sustainable modes of transport. This is vital from a student welfare perspective and strategically reducing reliance on private cars. For example, the Ulster University campus’s parking capacity is significantly lower when compared to the previous campus in Jordanstown (from 2,500 to 350 spaces). Two new bus routes have been delivered to service demand and significant investment (c.£10 million) to redevelop nearby Yorkgate railway station is ongoing. Belfast Bike stations beside Queens Ulster are among the busiest. There are also plans to pedestrianise some streets around the new campus building, including spaces for cycle lanes and more green space. This will ensure and prioritise safer walking and cycling routes, with the hope of encouraging livelier streets and greater footfall.

Ulster University reminds us of the importance of long-term strategic thinking. It may have taken longer than anticipated, but the strategic foresight in moving the Ulster University campus into the city centre has released a new regeneration dynamic in Belfast. It is hard to imagine what else could be so transformative.

Filling in the gaps

The government-led ‘Bolder Vision for Belfast’ identifies a desire to establish a clearly defined and recognisable north-south civic spine. While the Bolder Vision focuses on liveability and spaces between the buildings, there is an obvious interest in development of the unused and underused spaces along this corridor. The universities and their student populations play an important role in this.

The biggest impact is undoubtedly around the Ulster University campus and Royal Avenue. The life and energy from the additional 16,000 students and staff brings hope to a space where vacant units and dereliction have become the norm. The re-opening of Primark at Castle Place in the impressive resurrection of the Bank Buildings could not have been better timed. It was a much-needed boost that added vibrancy on the main route from City Hall to the new Ulster University campus, with a 20% deficit in year-on-year figures for city centre footfall through October 2022 vs. October 2019. There are signs that re-opening the Bank Buildings made an immediate impact – with November 2022 (the month in which the Primark store re-opened) footfall figures were up 5% on November 2019 figures, making Belfast the only UK city to exceed pre-pandemic footfall in that month.

While smaller investments in new retail and coffee shops also dot the route, our data shows a concentrated investment over the last two years to create or redevelop over 350,000 sq. ft of retail and leisure space on or close to Royal Avenue. Following on from the City Council’s plans to repurpose ‘2 Royal Avenue’ as a cultural space that will play host to concerts, exhibitions and more, the redevelopment of the vacant former Debenhams unit at CastleCcourt will also provide a new 120,000 sq. ft leisure venue. Belfast Stories repurposing the disused art deco former Bank of Ireland and developing the surrounding site, will create an exciting new cultural investment in the northern part of the city centre in coming years.

There is room for improvement. Vacant properties along Royal Avenue and adjoining streets await occupation – including properties earmarked for the large-scale Tribeca development. Notably, the journey from City Hall to Queens University shares some of the challenges north of City Hall on Royal Avenue, with vacant sites and units – particularly on Great Victoria Street and Bradbury Place.

Although this north-south connectivity and a focus for development activity provides substantial benefits, it will be important to ensure that the eastern and western edges of the city centre are not neglected. Hard barriers caused by motorways, train lines, and the River Lagan, require a conscious effort to ensure that investment is encouraged to improve east-west linkages. The Lagan Pedestrian and Cycle Bridge is included in the City Deal plans to better connect with Ormeau Park, with growing demand for further bridges with Titanic Quarter.

Both universities are integral members of the Belfast Region City Deal, who will develop and lead cutting edge facilities related to digital healthcare, global innovation, and screen media across the city in south Belfast, Titanic Quarter and the Harbour estate. In addition to extra educational space, this activity will increasingly focus on two key ingredients that are vital for the success of the city: innovation and collaboration.

Finishing university: should I stay or should I go?

While the university-led development of the city is transformative, encouraging young people at university to continue living centrally once they move into work is a big opportunity for any university city. Belfast has the challenge of enticing home-grown graduates to return once they have completed studies in Great Britain. 36% of Northern Irish students who studied in Great Britain are working in Northern Ireland six months after graduation, with net student migration estimated to be in the region of -14,000 each year.

While current financial conditions are forcing more graduates to live with parents, for those graduating from university and wanting to stay in Belfast city centre, there is a fundamental challenge of there being no obvious supply of accommodation.

A typical market response in other cities has been to deliver more build-to-rent, which has not yet happened in Belfast. These aim to improve the overall quality of the rental stock while offering amenities that are free to use (e.g., gym, co-working space, spaces to hire for gatherings), that improve the experience of the occupant and provide them with flexibility to relocate easily. Build-to-rent schemes appear to suit casual renters such as young professionals. While there are proposals in process, such as City Quays 4, no build-to-rent developments have broken ground to date.

Build-to-rent projects are an excellent source of evidence for markets to analyse and share with institutional investors. Like purpose-built student accommodation in Belfast, the expectation is that once the concept is proved, the markets for demand and supply will develop.

There has been some progress on smaller scale residential developments throughout 2022, with two new projects breaking ground. The schemes which started construction are Coyle’s Place, a 38-home development located beside the existing Portland 88 building (completed in 2019), and 20 College Square North, a 48-home social housing development. Other projects which fall below our scale threshold (25 homes) have also progressed, including Wilton House (23 homes) and a site on McClure Street (22 homes).

Despite these green shoots, Belfast Crane Survey data over the last six years has found been a persistent lack of residential developments. Belfast’s difficulty in getting larger schemes off of the ground stands out, with other Deloitte Crane Surveys highlighting residential development as the predominant sector in other cities such as Leeds, Manchester and Birmingham over the same period. While each city is different, there is undoubtedly a deficit in city centre residential stock in Belfast as a result of both historic and contemporary factors.

A determination to grow city centre living

A key aim of the Belfast Agenda and the Bolder Vision blueprint is to increase the permanent residential population of the city centre. The City Council, Departments for Communities and Infrastructure and others are looking at ways to accelerate this. Ideally, the city centre will see a mixed tenure development - including private rental, social rental and owner occupied. This is noted in the Department for Communities draft Housing Supply strategy and indicated through the mixed tenure development brief Belfast City Council have commissioned, relating to a collection of sites behind Belfast Central library. Development here is an important learning opportunity, given proximity to existing inner city communities and their need for additional housing. City Council have also commissioned the development of a City Centre Living Vision and analysis of how rates payment protocols differ for development in NI compared to elsewhere.

The policy thrust they set out in the Bolder Vision blueprint covers issues such as prioritising walking and cycling, high quality public realm, green spaces and use of the river that will collectively make the centre a more attractive place to live. Other cities with more developed city centre populations illustrate the need for a neighbourhood feel, with access to doctors, chemists, launderettes, and childcare. Notably the vibrancy, attractiveness and amenities that make for a good neighbourhood commonly complements an enjoyable experience for a visitor. There is continued progress on the Belfast Stories development and planned investment to refresh the exhibition space in Titanic Belfast that will boost cultural and leisure experiences for locals and visitors.

Based on trends elsewhere, the next wave of city centre dwellers are forecast to be young professionals, adding to the sizeable student population through ongoing retention and attracting new people. The strategic and tactical initiatives underway support the view that growing the residential population is arguably the defining theme of the city centre for the next decade.

What’s an office for?

Belfast entered the era of COVID-19 disruption with a substantial volume of office space under construction and several schemes well advanced in the pipeline. This momentum in office development meant that statistics for space under construction and completing in 2020 and 2021 continued to be large – as projects delayed by the pandemic continued through to completion.

As a partial result of this trend, 2022 saw the largest volume of office space completed since the Belfast Crane Survey began in 2016 with 571,000 sq. ft of new space opening – however 2022 also witnessed the fewest office new starts in the duration of the Crane Survey with just two new projects breaking ground. This year’s Crane Survey has recorded 242,000 sq. ft of office space under construction – the smallest volume reported to date.

Despite these demand-side challenges, 2022 has been another strong year for technology and professional services jobs created in the city with major employers including BT, Bank of London and Citi announcing over 750 new roles. Belfast continues to be competitive in attracting new corporate investment and employers. This pushes demand for city centre office space, albeit with a reduced focus on size and an increasing focus on the quality and utility of the space. The revision of the planned Kainos office development at Bankmore Square gives us a sense of how major employers in the city are re-evaluating their office portfolios and how the gaps left in the city centre could be plugged by other sectors. Half of this site has been sold to Queen’s University for the development of a 400-bed student accommodation block.

The frequency of workers coming into the office has a consequence for the wider city centre. The trend to date is that organisations are requiring less office space post-pandemic than they did before. Homeworking for a proportion of the working week has become the new norm for those who are able to do so (predominantly those in the service sector with traditional desk-based jobs).

Research by Belfast Chamber of Commerce suggests that only 12% of traditionally office-based businesses have returned to the office full-time, with 62% opting for a hybrid working model. However many businesses believe that maintaining a physical footprint is still important and focus on the quality of the working environment, aspiring to creating a space where employees can innovate and collaborate, while providing elements that cannot be replicated when working from home.

A flight to quality

The Deloitte London Office Crane Survey Winter 2022 suggested that a ‘flight to quality’ is ongoing with respect to office accommodation in the capital. There are signs that this trend is also reflected in the regions – with major new developments such as Olympic House focusing heavily on sustainability, health and wellbeing, and accessibility in their design and marketing materials. City Quays 3 (completed in 2021) is another example of a new development which focuses heavily on sustainability and wellbeing credentials – with some space in the building still to be let. One new tenant confirmed in 2022, Investec Wealth & Investment, specifically referenced being drawn to the premises because the sustainable characteristics of the building aligned with the organisation’s broader environmental and social agenda. Belfast Harbour plans to further the environmental credentials of the City Quays complex by progressing with City Quays Gardens, a proposed 0.8-hectare urban garden which aims to achieve the ‘One Planet Living’ environmental accreditation - a first for Northern Ireland.

Another major completion in 2022 was Bedford Square, comprising the historic Ewart Building and new tower. Following fit-out, the premises will be occupied by Deloitte as the flagship tenant, alongside other professional services firms. Quality and sustainability have been major areas of focus in this development. The new office space will be equipped with high quality audio and video facilities, designed to ease collaboration between remote and on-site clients and staff. Over 100 bicycle spaces are included in the building, as well as electric car charging points.

With new build office space focusing heavily on quality and sustainability orientated features, there is pressure on the historic stock to keep pace. We can already see this in our data, as three of the seven developments underway or completed in 2022 involve large-scale refurbishment and modernisation of existing spaces.

The focus on sustainability is evident in the Linen Quarter, which hopes to become Northern Ireland’s first sustainable district. The Linen Quarter Business Improvement District (BID) is running a programme that aims to support organisations as they transition to become more environmentally friendly organisations. It recognises the growing importance of sustainability to prospective tenants and the attractiveness of locating to a sustainable district.

Looking forward

City Deal projects will continue to progress. These include the development of ground-breaking educational facilities, a new bridge across the River Lagan, rapid transit infrastructure and the Belfast Stories cultural and leisure investment. The Belfast Transport Hub work will continue with the new facility and is due to open in 2025. The surrounding Weaver’s Cross will offer development opportunities for residential, leisure and office space.

The impact of the Ulster University campus fully opening will be fascinating to watch – especially with the potential development sites on and around Royal Avenue. The student accommodation sector in Belfast will continue to grow in tandem with the quality and supply of stock. However, there has been a substantial decline (c.35%) in students living in traditionally problematic HMOs in the Holylands. The investment pipeline is healthy, with demand for spaces in Purpose Built Student Accommodation blocks continuing to outstrip demand. In a December 2022 presentation to Belfast City Council, the universities jointly stated that the city may require up to 6,000 further student accommodation spaces to satisfy demand – suggesting we are only halfway through the boom so far.

A full-time, on-site presence is no longer the expectation for many white-collar workers. Companies and landlords are taking this as an opportunity to innovate and re-design their workspaces. With major office projects completed in recent years continuing to have space available, the forward look for office development looks more muted. Any development will likely focus more on issues of design, quality and sustainability which can differentiate their offer.

Finally, the strategic aim for increasing the residential population of the city centre continues to be a key issue. The tactical steps being taken alongside the increasing city centre student population (an ideal future market for build-to-rent) will hopefully move Belfast closer to unlocking this potential.