Office take-up in Liverpool city centre in the the second quarter of 2020 plummeted due to the coronavirus lockdown, new data from Avison Young shows. Tony McDonough reports
New data from property consultancy Avison Young reveals the “dramatic” impact of the COVID-19 crisis on Liverpool’s office market.
Its latest Big Nine report, which analyses the office markers in the biggest nine UK cities outside London, shows that in the second quarter of 2020 just 20,000 sq ft of office space was let in the city centre.
It reports a small pick-up in demand for Liverpool’s out-of-town market during the second half of the quarter with south Liverpool locations such as Wavertree pushing the total up to 15,000 sq ft.
The figure for April, May and June is well below the five-year quarterly average for the city which is more than 100,000 sq ft. In the first half of the year lettings totalled 105,000 sq ft, 70,000 sq ft in the city centre and 35,000 sq ft out-of-town. The largest deal in the city was law firm Taylor Wessing, taking 12,700 sq ft at Edward Pavilion at Royal Albert Dock.
Ian Steel, principally at Avision Young in Liverpool, is reporting an uptake in demand from smaller occupiers for office space in the city but adds the majority of occupiers, particularly those with the bigger requirements, are “either delaying or putting their occupational requirements on hold”.
Although lockdown restrictions have eased significantly is remains likely Liverpool will see lettings fall a long way below the five-year average of more than 600,000 sq for the whole of 2020.
Mr Steele said: “Like all cities across the Big Nine report, COVID-19 has had a significant impact on the city centre office market, with the majority of occupiers either delaying or putting their occupational requirements on hold indefinitely, while undertaking a strategic review and reassessment of their spatial requirements.
“On a more positive note, following the easing of the lockdown restrictions, there has been an increase in demand and viewing activity from smaller occupiers who are generally looking to acquire space on more flexible short-term leases.
“Despite this, we expect take-up levels will continue to be restricted in Q3, with many of the larger occupiers adopting a more cautious approach.”
The Big Nine report says the take-up across all nine cities is the lowest since the study was first undertaken in 2009. It reveals city centres saw a total take-up of 329,000 sq ft in the city centre with 447,000 sq ft being let in out-of-town markets, 75% and 42% below their respective 10-year quarterly averages.
Headline grade A rent for Liverpool remains at £21.50 per sq ft, the lowest among the nine cities. There is a consensus among agents that headline rents need to hit around £25 per sq ft to make speculative build an attractive proposition for investors. Out-of-town headline rent is £14 per sq ft.
The city is now behind Newcastle, once a fellow straggler, which now commands headline rents of £26 per sq ft. Top headline rents are Edinburgh at £37 per sq ft and Manchester at £36.50 per sq ft.
The Spine, at Paddington Village in Liverpool’s Knowledge Quarter, is currently the only city centre office space under construction and when completed in Q4, will provide 160,000 sq ft of quality office space. The Royal College of Physicians has agreed a pre-let deal to take 50% of the space.