Stuart Keppie, of Keppie Massie, also believes plans by Liverpool City Council to build new offices in Pall Mall won’t be enough to satisfy demand for quality office space among professional users. Neil Hodgson reports.
Prime rents for Liverpool offices must increase by at least 20% to encourage investors to replenish the city’s grade A space, says a leading local property surveyor.
Stuart Keppie, of Keppie Massie, also believes plans by Liverpool City Council to build new offices in Pall Mall won’t be enough to satisfy demand for quality office space among professional users.
He was responding to the annual Liverpool City Region Commercial Office Review which revealed there was just 50,000 sq ft of available grade A space left in the city’s office core.
No new-build
Mr Keppie echoed the concerns of other experts by pointing out top-grade accommodation is vital to attract big employers and hundreds of potential new jobs.
The volume of grade A space available is down from 91,869 sq ft in 2015.
Mr Keppie explained: “Worryingly, there is no new-build in the pipeline, other than Peel’s proposed 85,000 sq ft build at Princes Dock, and no scheduled refurbishments.
“We need to have that quality stock, and we haven’t got it.”
Higher rents
He added rents will have to increase in order to encourage developers to build new high quality office stock.
“Rental levels need to be over £25 per sq ft, compared with the current highest level achieved of around £21 per sq ft, which has been static for a while,” he said.
Wider picture
Liverpool City Council is planning to develop new office space in Pall Mall but Mr Keppie doubts this would satisfy current requirements, or that its location would tempt a sufficient range of new tenants.
He said: “The new build on Pall Mall won’t be available until at least 2019, and currently it would be regarded in the market and by professional users, as ‘off pitch’.
“It might be extending the core, but it’s not the main nub of the commercial business district and we don’t just need that one scheme, there’s a wider picture here.
“Viability is the key and rents need to rise for there to be an improvement and expansion in the stock.”
New incentives
Mr Keppie also believes there is a continued need for incentive schemes to support landlords as the office market has been skewed by the European grant regime that has been in place for the past 35 years.
“There have been massive rent free offers for up to 40% of the duration of a lease in some cases which has also acted as a deterrent to investing in Liverpool’s office market,” he said.
“This has also been seen in Manchester, but has been reined in recently, and this needs to happen in Liverpool.”