The volume of commercial space leased within the Liverpool City Region in 2019 fell by more than 30% year-on-year to 568,000 sq ft, below the five-year average of 638,000 sq ft, according to a study.
The latest annual Office Market Review, compiled by Professional Liverpool and Liverpool BID Company, showed a drop in office take-up since 2018 and raised concerns over a lack of prime stock in the city-region.
Of the total space taken in 2019, around 60% was in the commercial district of the city centre, where the largest deal was Sony’s 65,000 sq ft in the Echo Buildings. Outside the commercial district, the largest deal was Greensill’s 27,000 sq ft letting at Daresbury Park 2100.
Last year’s total was significantly below the 867,000 sq ft achieved in 2018, when HMRC took 350,000 sq ft at India Buildings.
The next available grade A office space will come to market when the Spine at Paddington Village completes in the university district this autumn.
Other large projects in the pipeline include Liverpool Waters and the Pall Mall Development but until these projects complete, occupiers are looking at Grade B and B* office space to satisfy immediate demand, according to the report.
The report said: “Liverpool’s office market is in good health, yet there is an urgent need for Grade A office space, and, after 2018’s record-breaking year, a need to focus on the future strategy for growth.”
The report added that demand was also growing for short term flexible spaces for small businesses looking to establish a presence.
While the number of transactions has decreased, the size of transactions continues to increase year on year, the study shows. In 2014, the average take-up in the commercial district was 3,209 sq ft, while in 2019 that figure had grown to 4,040 sq ft.
The report noted that “political uncertainties” caused a reduction in investment volumes in 2019, with owners showing reluctance to market their properties. That said, last year still saw the sale of Exchange Flags by Shelborn Asset Management to Ashtrom Properties for £68m, reflecting a net initial yield of 7.65%.
Andrew Byrne, head of the property group at Professional Liverpool, said: “While we didn’t manage to hit the dizzy heights of 2018’s figures, 2019’s results are more aligned with the 5-year average.
“We continued to see downward pressure on the supply chain, particularly within the commercial district, which contracted by over 33% and hit an all-time low of 475,351 sq ft.
“The need for Grade A supply is growing year on year and the lack of speculative development is meaning larger footloose requirements are dismissing Liverpool as an option in the short to medium term.”