Newcastle city-centre office space remains limited – Lambert Smith Hampton
Take-up of office space in Newcastle city centre slowed considerably in the final quarter of last year, totalling just 13,332 sq ft compared with 23,363 sq ft a year earlier, says Lambert Smith Hampton. This took the total for the whole of 2012 to 750,541 sq ft, down 1.6% from the previous year’s total of 762,724 sq ft.
The market for out-of-town Newcastle offices performed much more strongly in Q4 2012, with take-up reaching 181,925 sq ft compared with 234,362 sq ft a year earlier.
Only 29% of total take-up across the city centre and out-of-town markets was Grade A space, while transactions of Grade B and C space dominated activity in both markets, the firm notes.
Total supply in the Newcastle city centre office market is 1.1m sq ft, says Darron Barker, head of offices for Lambert Smith Hampton in Newcastle, of which only 23% is Grade A space. “City-centre options are limited for larger occupiers,” he says, “and this will continue to be a concern”.
Development of office space in Newcastle city centre is limited to the 30,000 sq ft of new space to be provided by the Stephenson Quarter scheme. “With several significant lettings expected to complete during 2013, the available options for larger occupiers will remain extremely limited,” Mr. Barker adds. Meanwhile, out of town there is more than 4m sq ft of vacant space available, of which 1.2m sq ft is Grade A. Most of this is located at the Cobalt and Quorum business parks in North Tyneside, he notes.
Companies that are in the process of consolidating their office functions are expected to bolster demand this year, says Tim Powner, head of office agency at Lambert Smith Hampton. “We will also witness a growing number of inward investment requirements as corporate occupiers look to the North East as a viable and cost-effective business location,” he adds. Headline rents in Newcastle are £21 per sq ft in the city centre and £16.95 per sq ft out of town.
The fact that floor space is limited for large companies although unsettling is a good sign. We’re still in a recession and a lot of companies are still struggling to stay a float, so the fact that there is such a demand for space in Newcastle is good news.