Given planning approval in 2019, the proposed Pall Mall 400,000 sq ft office scheme in Liverpool stalled when a pre-let from BT fell through – but the city council is keen to revive the project. Tony McDonough reports
A 400,000 sq ft office scheme in the heart of Liverpool’s commercial district is set to be revived.
LBN understands senior city council officials are “actively” looking at ways they can turn the stalled project into reality. It would provide a much-needed boost for the central business district (CBD) that has seen no new grade A space in more than a decade.
It was in 2019 when joint developers Kier Property and CTP secured planning consent for the £200m council-backed project. It would include a trio of office buildings as well as a hotel. Remediation work began on the site of a former small park.
Crucial to the first phase of the scheme was an 80,000 pre-let agreed with telecoms giant BT which wanted to move its existing Liverpool team into the development. However, the pandemic forced BT to rethink its need for office space and the deal was put on ice.
At a Place North West event in November, Sophie Bevan, director of regeneration at Liverpool City Council, said: “We are working on financing to transform the central business district. Our commitment Is crucial.”
Although she didn’t mention specific projects LBN understands she and her team are keen to revive the Pall Mall scheme.
They are looking at how other local authorities have got actively involved to turn major commercial developments into reality. Nearby examples include the Northgate scheme in Chester and the two new office buildings in the centre of Birkenhead.
However, a major pre-let agreement would still be crucial to any revival of Pall Mall. Soaring construction costs have made speculative office development even more of a risk.
However, there is also a belief that the imminent redevelopment of the King Edward Triangle by Home Bargains billionaire Tom Morris could provide a catalyst for a new era of development in and around the CBD.
In November LBN reported how the CBD grade A office space pipeline had run dry. There has been no new space created since the St Paul’s Square development more than a decade ago and that scheme required state support.
A number of schemes have threatened to emerge from the ground in the years since, most notably proposed office developments at Princes Dock in Liverpool Waters and Pall Mall, but none have become a reality.
Even the quality refurbished space pipeline has had its troubles. The much anticipated Martins Bank transformation now appears to have stalled. Owner Karrev remains silent on the prospects for the 210,000 sq ft scheme.
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No grade A space set to come online in Liverpool’s CBD for at least the next two years. In contrast, Manchester’s development pipeline until 2026 totals 812,500 sq ft, with most already spoken for.
Latest figures from the Liverpool Office Agents Forum showed a total of 85,938 sq ft of office space was acquired in Q3 in 22 deals within Liverpool city centre, which is a significant increase from the 23,879 sq ft of lettings in the previous quarter.
A key issue in Liverpool is headline rents. This figure matters to funders of office schemes because it offers a measure of a return on investment. If headline rents are too low then there is little incentive to build speculatively.
Liverpool’s headline rent is £28.50 per sq ft. This is 12% higher than a year ago but it remains the second lowest in the Big Nine, just ahead of Cardiff which offers £28 per sq ft. Manchester’s headline rent is £44 per sq ft with Bristol top at £50 per sq ft.