Boost for Liverpool office market as take-up jumps
Liverpool City Region recorded 412,000 sq ft of lettings in 2021, up 46% from the previous year, according to research by Liverpool Office Agents Forum.
Total take-up within the city centre’s commercial district in 2021 was 261,179 sq ft, while out-of-town deals totalled 151,141 sq ft.
The largest city centre deal of the year was to the DWP, which took 20,020 at 90 Duke Street. Out of town, Santander inked the largest letting, taking 15,000 sq ft at Alaska House at Atlantic Park.
The bigger picture
While 2021’s results are an improvement on 2020, they are still down on pre-pandemic levels. In 2019 and 2018, around 600,000 sq ft of deals were signed across the city region, according to Avison Young’s Big Nine report.
In 2017, take-up of just under 1m sq ft was recorded.
The supply dynamic
The supply of office space in the city centre totalled 604,008 sq ft at the end of 2021, a 22% increase in availability in 2020, according to LOAF.
Liverpool’s lack of supply, which has long been a concern among the city’s office agents, was helped by Kinrise’s acquisition of the 210,000 sq ft Martins Bank Building last August.
The building had previously been earmarked for a hotel scheme but Kinrise’s decision to deliver offices there has provided a much-needed boost to Liverpool’s office pipeline.
“Kinrise’s recent purchase of Martin’s Bank for office use reaffirms the confidence in the market,” said Andrew Byrne, director at CBRE.
“This injection of availability will be key in the short term as the issue with grade A development still persists. Hopefully, new record rents within this building will instigate the next phase of redevelopment.”
The rental outlook
While supply grows, headline rents continue to grow increase across the city region, according to LOAF.
Many city centre buildings are achieving more than £20/ sq ft per sq ft, while the highest rent recorded in 2021 was £25/ sq ft at the Royal Liver Building, which was recently put up for sale.
The out-of-town markets saw steady rental growth last year, with many markets achieving between £12/ sq ft and £14/ sq ft throughout the year, LOAF’s research found.
The experts’ view
“The level of demand for offices significantly increased in 2021 as occupiers became more confident that the restrictions of early 2020 would be unlikely to return,” said Byrne.
“The focus of occupiers has once again evolved and is now on quality of space, amenity within the development, and how the office can align with the occupiers’ ESG strategy. This is leading to a flight to quality with a number of the key buildings regularly achieving rents in excess of £22/ sq ft.”
Jon Swain, partner at Mason Partners, said: “With office occupancy being vital to the health of a city’s wider economy, it is very encouraging to see increasing demand and improving rental levels both in the CBD and across Liverpool City Region as the economy has continued to recover from the pandemic.
“These welcome figures should provide a firm backdrop to further strengthening of the market over the course of 2022.”
Liverpool Office Agents Forum is made up of CBRE, Hitchcock Wright, Avison Young, Worthington Owen, Mason Owen, Keppie Massie, Mason Partners, Eddisons, Matthews & Goodman, and B1 Real Estate.