Despite the UK's stagnant trading conditions, Liverpool city centre average office rents will record rises of between 2% and 4% in each of the next three years, according to a report by GVA Grimley.
The report's authors said resurgent financial and business sectors and a limited supply of new completions will mean that average rents over the coming years will rise by 2.2% in 2008, 2.7% in 2009 and 3.6% in 2010. However, the rise is a slowdown on the four years from 2002 to 2005 when an average of 5.6% a year was enjoyed. Growth stood at just 1.8% in 2007.
The Liverpool City Centre Office Market Report is GVA Grimley's first in the city and among its findings the authors also highlight the move north of the business district back into Old Hall Street and the Pall Mall area.
Prime headline rents in Q1 2008 in central Liverpool stood at between £20-£21/sq ft, GVA Grimley said, unchanged from the end of 2007, yet significantly higher than 18 months ago when prime rents stood at £18/sq ft.
According to the report, office stock in central Liverpool currently totals 9.3m sq ft, with 1.5m sq ft available, this equated to a vacancy rate of 16% of total stock. GVA Grimley reports that there are only two new buildings – 20 Chapel Street and No 5 St Paul's Square – that currently have space available, meaning that the majority of available space is either Grade A or Grade B refurbished.
The Liverpool office investment market has mirrored national trends with prime yields falling in 2002-2006 before beginning to rise again in the early part of 2007. As of March 2008, the report details that prime office yields in Liverpool were at 6.25%, levels, which have not been seen since 2005.
Total returns for the office market in Liverpool are expected to come in at broadly zero for 2008 but total returns are expected to regain momentum from 2009 onwards, coming in at 8.7% and then approximately 9% over the following two years.
- A full copy of the GVA Grimley Liverpool City Centre Office Market Report is available at the Place Resource Library.