Take-up of office space in Liverpool city centre in the first quarter of 2022 was ‘significantly lower’ than the previous five quarters, according to Avison Young – but this is set to change. Tony McDonough reports
Letting activity in Liverpool city centre’s office market is set to surge in the next few months, according to the latest Big Nine survey from Avison Young.
According to the quarterly study, which analyses the top nine UK office markets outside of London, Liverpool saw a quiet first quarter in 2022. Five deals completed totalled just 8,005 sq ft.
However, Avison Young reports a number of deals close to completion. It is forecasting a significant increase in take-up during the second and third quarters. It says the largest deal in the first quarter was Keller Lenker UK which took 3,293 sq ft at the Cotton Exchange.
Although first quarter take-up was low, its says demand and enquiry levels have increased. It adds there are a number of large active requirements in the market. These include Firesprite, Avalanche Studios and GUS.
Despite new space coming onto the market elsewhere, in particular The Spine in the Knowledge Quarter, Liverpool’s commercial district is still being constrained by a shortage of grade A office space.
Demand has pushed up headline rents in the city from £22 per sq ft to £23 per sq ft. The higher the headline rents the more incentive developers and investors have to build speculatively. Liverpool is firmly rooted to the bottom of the ladder in this respect.
It is behind Cardiff, where rents are £25 per sq ft and Newcastle at £27.50 per sq ft. Manchester is close to the top of the league at £38.50 per sq ft and Bristol is firmly on top at £42.50 per sq ft.
Avision Young says: “Significant pre-letting activity will be required to underpin any new development in the city at either No 5 Princes Dock (Liverpool Waters) or One Pall Mall Gardens.
“These would be the first new buildings to be delivered in the commercial district since 2011. A lack of good quality supply has put upward pressure on rents, with any pre-letting activity likely to set a new rental tone for the city.”
Kinrise will bring 160,000 sq ft of refurbished space at Martins Bank Building onto the market but not until late 2024. Lack of space across the city has seen the vacancy rate stand at just 5.2% in the latest quarter. This is better than the 4.9% in the previous quarter but well below the 18% seen in 2014.
Liverpool city region’s out-of-town market saw more activity than the city centre with take-up totalling 72,743 sq ft in the first quarter. Wirral was the most active submarket accounting for 19% of take-up. It also set a new record headline rent of £16.50 psf with the letting at Hythe (Wirral Waters) to Starship.
Hythe was speculatively developed by Peel and is the first new office building to be developed on the Wirral for over a decade.
Both Wavertree and Knowsley also saw significant activity, accounting for 18% and 15% of take-up, respectively. Key deals included MJ Quinn who committed to a lease on 11,224 sq ft at Nexus, Knowsley and ITS Technology Group for 7,019 sq ft at Cinnabar Court.