Experienced Liverpool commercial property professional Neil Kirkham says the city’s office market sprang into life in late 2025 but warns the chronic shortage of grade A space remains the ‘elephant in the room’ in 2026. Tony McDonough reports
Leading Liverpool commercial property professional Neil Kirkham says the city centre’s office market recorded a strong performance in 2025 but warns on the ongoing shortage of grade A space.
Neil has been with CBRE in Liverpool for more than 11 years and on January 1 he stepped up from senior director, head of leasing to head of office having “built strong relationships with developer, investor, leasing and occupier clients across the region”.
In an early year assessment, Neil says the local market, particularly in the traditional commercial district around Old Hall Street, is at a “fascinating intersection” of local supply constraints and a national “flight to quality”.
He explained: “Looking back at 2025, it was a year characterised by a significant rebound in activity, culminating in some of the strongest quarterly take-up figures we have seen since 2022.
“However, as we look forward, the narrative for the next twelve months will be defined by how we address a chronic shortage of grade A stock.”
Indeed Neil calls this shortage the “elephant in the room”. It is now more than a decade since the last significant investment into grade A office space in Liverpool’s CBD. That was the St Paul’s Square development off Old Hall Street. That needed state support, in the form of EU funding, to get built.
In May 2025 Liverpool City Council said it was ready to spend £15m to revive the stalled 111,500 sq ft Pall Mall office project. This was due to go ahead with a pre-let from BT but the communications giant pulled out following the pandemic. The new project would cost £55m.
Liverpool’s commercial district has fallen behind other regional cities in recent years as its pipeline of grade A space has dried up. New space is seen as essential to attract blue chip occupiers.
Key to speculative development is headline rents. Developers and investors won’t take the risk unless they can see good returns. In recent years Liverpool’s headline rent, currently at £29.50 per sq ft, has been seen as too low to kick-start new schemes.
In comparison Manchester’s £45 per sq ft headline rent has seen the city create a strong pipeline of space.
In the third quarter of 2025, take-up of office space in Liverpool was the strongest since 2022, totalling 97,606 sq ft, 17% above the 10-year average. This was boosted by a Government letting of 52,000 sq ft at The Capital.
Neil added: “The 2025 calendar year was a tale of two halves. We began with a degree of inertia as businesses navigated a volatile macroeconomic backdrop, but by Q3, momentum had shifted gear.
“This resurgence was underpinned by major transactions, most notably the UKBA’s 52,000 sq ft letting at The Capital in Old Hall Street. This deal reflected a broader UK trend identified in CBRE’s 2025 Office Occupier Research.
“This highlighted that while many firms are right-sizing their footprints, their commitment to physical, centrally located hubs remains unwavering.”
But, addressing the grade A shortage, he said: “Despite the positive take-up, we cannot ignore the ‘elephant in the room’. Our supply-side challenges. As we enter 2026, Liverpool’s grade A vacancy rate sits at a record low of approximately 0.3%.
“The shortage of premium space is a double-edged sword. On one hand, it has driven vacancy rates down to 5.6% – the lowest among the UK’s ‘Big Nine’ regional cities.
“While this will clearly lead to upward pressure on headline rentals and downward pressure on incentives available to occupiers, it also risks stifling inward investment.
“Our regional neighbours, such as Manchester and Birmingham, are seeing headline rents exceed £45 to £50 per sq ft, levels that make speculative development more viable. In Liverpool, the current rental ceiling remains the primary hurdle to unlocking the next generation of office schemes.”