Available office space in Liverpool city centre is just 56% of what it was five years ago, new data shows. Tony McDonough reports
There is 568,000 sq ft of available office space in Liverpool city centre – just 56% of what it was five years ago and 31% of what it was 10 years ago.
According to the latest quarterly Avison Young Big Nine survey, Liverpool has among the lowest of the nine biggest office markets in the UK for availability outside London. And one expert is warning that big occupiers are now bypassing Liverpool.
At the Place North West Merseyside development update earlier this month, CBRE’s Neil Kirkham warned there was now just 60,000 sq ft of grade A office stock in the city centre – just 9% of the total supply.
“There are five buildings in the whole of the city that can accommodate over 20,000 sq ft,” Mr Kirkham said. “That’s something that we need to address.”
Since the completion of the 400,000 sq ft St Paul’s Square development in 2011 there has been no new grade A space built in the city’s central business district. Prime rents are £25 per sq ft. For several years grade A rents have been too low to incentivise speculative development.
Proposals to build new office space at Pall Mall and Princes Dock have stalled due to this problem. LBN reported in October that Peel L&P may be ready to revive its Princes Dock scheme, which would offer 100,000 sq ft.
On the other side of the city centre, in the Knowledge Quarter, The Spine, a £35m 200,000 sq ft development, opened in May 2021. But this was underpinned by a 70,000 sq ft pre-let to the Royal College of Physicians.
A second office budding for the area – called HEMISPHERE – secured planning consent in November. It would offer 120,000 sq ft of grade A office space.
According to the Big Nine survey, office take-up in the third quarter of 2022 in Liverpool city region was 114,000 sq ft – 9% down on the second quarter and 12% down on the 10-year quarterly average.
Of that total, 63,000 sq ft was in the city centre. Notable deals during the quarter included Barnett Waddingham’s 8,700 sq ft relocation from the Port of Liverpool Building to the Royal Liver Building and Causeway Technology’s 9,100 sq ft deal at the recently completed Hythe at Wirral Waters.
No grade A space was let in the city centre during the third quarter. The market is currently being driven by sub-5,000 sq ft transactions, Avison Young said.
Its report stated: “A high percentage of occupiers are currently reassessing their spatial requirements and deferring decisions to take new space. While many occupiers that are approaching lease events are looking to downsize and take better quality space.
“Subdued development delivery in the aftermath of the global pandemic, however, means that many such occupiers are unable to find the quality of space they need.
Ian Steele, principal in Avison Young’s Liverpool office agency team, said: “The lack of availability of Grade A offices in the city still remains a concern in the occupational market.
“Any new development will require significant pre-commitment before new space can be delivered. Demand for good quality space remains high.
“Those landlords and investors who have committed to upgrading and refurbishing space, providing tenant facilities and amenities have managed to secure new occupiers and seen an increase in headline rents.”