City centre office take-up fell drastically to 245,289 sq ft in 2008, compared to 462,875 sq ft in 2007, according to the annual report by Liverpool Vision and the Merseyside Property Forum.
The Liverpool Commercial Office Market Review 2008 cites a reduction in public sector deals, where just two, totalling 15,774 sq ft, were completed during the year, among the main reasons for the decline. Public sector transactions accounted for 6.4% of the market in 2008, a notable fall from 31.8% in 2007.
The largest deal of the year was the Liverpool Council for Voluntary Services acquiring 42,458 sq ft at Stanley House.
"Reliance on a small number of large deals inevitably carries with it the risk that slow progress on a handful of transactions disproportionately effects the total take-up recorded," the report said.
Merseytravel's 140,000 sq ft prelet at Neptune/Countryside's Mann Island in January this year is a return to public sector dominance.
The only sector to grow was creative, media and information technology which rose from 16,125 sq ft in 2007 to 21,462 sq ft.
The global financial crisis inevitably bit hard on the market; 10% of the take-up was completed after the collapse of Lehman Brothers and the ensuing chaos from 1 September onwards. Normally this closing period accounts for 60% of take-up.
Vacancy rates in the city centre, overall size 7m sq ft, held stable at around 13%. The rental tone was also maintained, at around £21.50/sq ft for new space and £16/sq ft for refurbished. Investment yields moved from sub-5% in the peak to 6.25% according to figures from DTZ quoted by Vision. The largest investment deal of 2008 was MCR Property Group's purchase of 2 Moorfield for £10.8m, accounting for more than half the market by value.
Liverpool's Midtown, a fringe area incorporating Ropewalks, Rodney Street and the Georgian Quarter and Liverpool Science Park in the university district, continued to establish itself, with 75,891 sq ft of take-up.
Out-of-town markets including business parks in North and South Liverpool, Wavertree and Knowsley, posted 221,817 sq ft.
- The document can be downloaded at Liverpool Vision's website. The report uses statistics based on original research by the Merseyside Property Forum with co-operation from Irving Rice, Hitchcock Wright & Partners, Keppie Massie and Mason Owen & Partners.