Office take-up slows across the North

With the exception of Manchester, Avison Young’s latest Big Nine report showed that the amount of square footage let for commercial space was dramatically down during the second quarter of the year.

Take-up in Leeds, Liverpool, and Newcastle shrunk 50%, 72%, and 55%, respectively, during Q2. A decrease in take-up was in line with national trends, which saw an average decrease of 13% across Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, as well as the Northern cities.

That 13% figure could have been worse – but Manchester and Bristol bucked the trend. In Manchester, take-up increased by 40% on the previous quarter. Bristol’s numbers were 12% higher this quarter.

Take-up percentages, however, are just one aspect of the greater picture of the office scene in the North. Read on to hear more about each of the Northern city’s rent figures, development pipeline, and office availability. You can learn more by browsing Avison Young’s full Big Nine report.

Manchester

The Avison Young report puts Manchester’s take-up in the second quarter at 506,700 sq ft. Bolstering its numbers were a duo of large leases to coworking companies: Cubo’s takeover of the 59,400 sq ft WeWork space at No1 Spinningfields and Koba’s leasing of 28,100 sq ft at 100 Barbirolli Square.

Relentless and KKR’s No1 St Michaels development, which is still under construction, continued to be a tour de rental force in the second quarter of the year. S&P Global took 20,000 sq ft at the complex, breaking a Manchester headline rent record in the process with a deal at £44/sq ft.

That £44/sq ft rent figure is 10% higher than the prime rent in Manchester a decade before, according to Avison Young.

Expect St Michaels to play a large role in Manchester’s Q3 figures too – microchip designer Arm agreed a lease for 69,000 sq ft at the office block in August.

The Manchester office market is likely to remain an active one, with an availability rate of 8.3% – a figure that is just 2.9% for Grade A space. That number will increase thanks to an additional 942,500 sq ft of offices in the pipeline – notably HBD’s Island, Bruntwood SciTech’s No3 Circle Square, and Ask Real Estate’s First Street.

Matt Pickersgill, associate director at Avison Young, described Q2 as bringing a “much-needed injection of activity” to Manchester.

“Demand for best-in-class space still remains consistent with the continued interest in the latest new build space with a number of high profile live Grade A requirements expecting to land in the second half of the year,” Pickersgill continued.

He cited St Michaels as proof of the demand for high-quality space in Manchester, noting that ARM’s letting had taken it to fully let status.

“Given the tightening of Grade A supply, we anticipate headline rents will continue to rise during the second half of the year and will surpass £45 per sq ft,” he added.

Leeds

Leeds’ take-up was 146,100 sq ft, with the largest deal of the quarter being Leeds Teaching Hospital NHS Trust taking 43,700 sq ft at Joseph’s Well.

Other notable deals, according to Avison Young, were Allianz’s 6,800 sq ft lease at 4 Wellington Place and Future Forwarding Company’s 6,100 sq ft lease at Turnberry Business Park in Gildersome.

Of the Northern cities explored in the Big Nine report, Leeds had the second highest prime rent for the quarter with £38/sq ft.

Similar to Manchester, Leeds boasts an availability rate of 8.2%. Much of that is not premium space either, with Grade A availability at 1.3%.

Worth keeping an eye on is the Leeds office pipeline, with 437,520 sq ft set to complete before the end of the year. Nearly 40% of this is pre-let.

Newcastle

Newcastle saw 108,900 sq ft taken up during the second quarter of the year, with Avison Young citing Equans 8,000 sq ft lease at Spectrum 7 and Oak Engage’s 7,500 sq ft lease at Central Square as two key deals.

The prime rent for the city has improved to £32/sq ft – 9% higher than the year before. Availability is also on the up in Newcastle, now listed at 9%. That shows a growth of 2279 basis points compared to the previous year, Avison Young said. However, the availability of Grade A space remains low at 1.4%.

Regarding the pipeline, the consultancy highlighted HMRC’s Pilgrim Place as a development to watch. Already let to the government agency, this 464,000 sq ft complex is due to complete in 2027.

Liverpool

Compared to its Northern brethren, Liverpool’s take-up was rather abysmal with only 37,000 sq ft leased. The largest of these deals were at Exchange Station, where Bespoke took 5,200 sq ft and Moore & Smalleys signed for 4,100 sq ft.

The city also had the lowest prime rent of the Northern cities, with its figure set at £28.50/sq ft. However, that represented a 12% growth over the previous quarter.

Liverpool also had one of the lowest availability rates in the North, with just 5.1% of office space ready to be let. The amount of Grade A space is even lower – just .1% is free.

Could this turn around? There’s 153,100 sq ft of speculative space currently being refurbished, including the work being done at Martins Bank Building at No1 St Paul’s Square.