Demand for Liverpool offices holding up well, says DTZ
Office agents at DTZ are advising on three occupier requirements totalling 350,000 sq ft, which could see the 2009 take-up level smash the five-year average if the deals complete.
The five-year average between 2004 and 2008 was 390,000 sq ft, peaking at 498,000 sq ft in 2005 but falling to 245,000 sq ft last year.
In January 2009, transport organisation Merseytravel committed to a pre-let of 110,000 sq ft at Neptune and Countryside's Mann Island, lifting hopes for a return to a healthy take-up by the end of the year.
Ken Bishop, director at DTZ, commented: "At a time when the economy is suffering from the impact of the recession, it is good to see that there are so many positives in the Liverpool office market which can be drawn upon. Whilst this will ensure that activity in the market continues, the benefits will unfortunately not be felt by all."
On the supply side there is 186,000 sq ft available in two completed new developments, St Paul's Square 69,000 sq ft and 20 Chapel Street 117,000 sq ft, equating to only 2.3% of Liverpool's office stock.
Bishop pointed out there would be no new speculative development completed in 2010 within the city centre. In 2011, three floors totalling 30,000 sq ft will be brought forward by at Mann Island. There is also a possibility that English Cities Fund may complete the speculative development of 4 St Paul's Square, 100,000 sq ft, during 2011.
Bishop added: "The good news for occupiers is that incentives are at a record high. The general lack of liquidity in the market has caused developers in many cases to pay for the tenant's fit out as part of the incentive package. The total level of incentives offered makes 2009 probably the most opportune moment ever for occupiers to move office, on the assumption that their existing lease enables them to do so.
"Rental values, both headline and the net rental (after the impact of the incentives has been taken into account) are currently reducing but this trend is likely to be reversed during 2010 as the supply of quality product is let."
