It has been a strong start to the year in the North West with office take-up in Liverpool exceeding 90,000 sq ft for the first quarter of 2016, according to a Bilfinger GVA report.
Manchester experienced a slower than expected start to the year but a series of significant pending deals are expected to strengthen Q2 figures.
The property consultancy’s Big Nine: Quarterly review of the regional office occupier markets analyses regional city centre and out-of-town office activity in the Big Nine cities outside of London.
Take-up in Q1 in Liverpool exceeded the five year quarterly average of 80,000 sq ft with a number of key deals completed which included 26,000 sq ft of lettings at Walker House, 11,500 sq ft of which was to Brookes Bell. Whilst at Mann Island, Seadrill acquired an additional floor of 10,890 sq ft.
This follows two consecutive quarters of Liverpool office take-up exceeding 100,000 sq ft.
In Manchester city centre, take up was slightly below the five year quarterly average at 196,533 sq ft of lettings for Q1. Key deals completed included Squire Patton Boggs (28,000 sq ft) at 1 Spinningfields, Kacoo Fashion (25,000 sq ft) at Fabrica and Arup (16,000 sq ft) at 4 Piccadilly Place.
However, the slower than expected start to the year for the Manchester market is largely due to Freshfields’ anticipated 80,000 sq ft commitment at Muse’s One New Bailey not completing before the end of the quarter.
This major letting and the expected commitment from the Department of Work and Pensions (50,000 sq ft), Irwin Mitchell (20,000 sq ft) and Money Supermarket (20,000 sq ft) are likely to bolster second quarter figures.
Ian Steele, director at Bilfinger GVA Liverpool, said: “It’s been another strong quarter in Liverpool and there continues to be a healthy pipeline of new occupier requirements and an increase in transactional activity which should ensure that take-up levels remain high.
“However, the main issue is that the city is faced with a diminishing supply of good quality office space and no immediate development pipeline. Liverpool now has less than a year’s worth of Grade A supply and with no new office development schemes currently on site, it will be 2018 at the earliest before we see new space delivered into the market. This is likely to have a detrimental effect on take-up levels and transactional activity over the next few years as both inward investment requirements and existing occupiers will be faced with limited options when considering relocation.”
David Thwaites, Associate at Bilfinger GVA Manchester, said: “The lack of available Grade A stock coupled with the uncertainty over Brexit have been the two principle factors in contributing to a relatively slow start to the year. Although these factors will continue through to Q2 the number of sizeable requirements currently in the marketplace is as high as I can remember and should lead to an extremely busy end of year.
“With increased occupier demand and new schemes coming closer to completion we are confident that in excess of one million sq ft will again be transacted by the end of 2016 for the third year in a row which would be a first for Manchester and further testament to the city’s reputation as the number one business destination outside of London.”
Overall, regional office take-up across the Big Nine markets witnessed the strongest start to the year since prior to the economic downturn.
Figures in Q1 were anchored by significant deals. City centre office lettings dominated this period with Morgan Stanley securing the largest deal in the UK to double the quarterly average take-up in Glasgow.
Overall city centre and out of town take-up amounted to 2.3 million sq ft, 13 per cent above the five-year quarterly average. City centre total take-up comprised 1.47m sq ft, 17 per cent above the five-year quarterly average. Out of town total take-up amounted to 0.86m sq ft, 7 per cent above the five-year quarterly average.
For further information on the research please contact Carl Potter, Senior Director at Bilfinger GVA on 0121 609 8388 or email firstname.lastname@example.org or report author Giles Tebbitts on 0207 911 2670 or email email@example.com.