GVA Bilfinger directors Ian Steele and Stephen Cowperthwaite say the conversion of old office building to apartments and restaurants leaves the city centre market with a serious shortfall. Tony McDonough reports.
Liverpool city centre has lost more than 1m sq ft of office space over the past 18 months and is at risk of not having enough accommodation to meet growing demand.
In an interview with YBNews, GVA Bilfinger Liverpool directors, Ian Steele and Stephen Cowperthwaite, say the city could run out of new or high quality refurbished space by late next year.
Office core shift
Liverpool’s traditional office core has shifted in recent years from the Castle Street/Dale Street/ Water Street area to Old Hall Street.
Developments such as St Paul’s Square and 20 Chapel Street have attracted high profile occupiers such as DWF, Hill Dickinson and Liverpool FC.
Buildings around Castle Street/Dale Street/ Water Street are increasingly being converted to residential use or by restaurants or hotels.
‘Major concern’
Mr Steele says it is good news for the Liverpool economy that those older buildings are being put to good use but warns that not creating new office space is a growing problem.
“Given that the overall size of the city centre office market is around 7.5m sq ft, to lose 1m sq ft of stock in a short space of time is a major concern,” he explained.
“Silkhouse Court is about to be converted to residential and that alone is 120,000 sq ft. With the exception of India Buildings, most of Water Street is now being converted to other use.
“If we get a requirements coming in now for say, 15,000 sq ft on a single floorplate, there would be very few options in the city centre.
“By the end of next year there could potentially be very few options.”
Investors needed
Mr Cowperthwaite added: “The city centre has changed dramatically in recent years. It is a much more attractive place – not just to visit, but to live and work in as well.
“But we also need to attract more inward investment and we need more office stock to make that happen.”
A barrier to developers creating speculative space in the city is rental levels. Current grade A headline rents are £21.50 per sq ft. For a scheme to be viable a developer would want to see rents of at least £22 to £23 per sq ft.
The only scheme with planning permission at the moment is Peel’s proposed William Jessop House office block in Princes Dock which would provide around 80,000 sq ft.
But work on that is unlikely to go ahead in the current market without a significant pre-let.
Improving market
However, Mr Steele says there are signs that the market is picking up, adding: “Rents on refurbished space were around £14 per sq ft but at Exchange Station in Tithebarn Street and Exchange Flags they are now up to £16 per sq ft.”
He says the recently refurbished Exchange Station development is a real positive for the city, as is the popularity of office developments at Mann Island and Princes Dock on the waterfront.
And he believes this year could be the best year for take-up since the recession.
“Exchange Station had 100,000 sq ft of void space that was being ignored and now it has been brought back to life,” he added.
“Now there are nine or 10 deals in the pipeline there.”