Partner Article

The Newcastle Occupier Market

The Newcastle Occupier market

By Patrick Matheson, partner, office agency, Knight Frank, Newcastle

Office take-up in the city centre dipped in 2016, although stayed broadly consistent with the long-term average. Availability remained low, a feature of the market that will persist in 2017 with the development pipeline consisting of a small number of comprehensive refurbishment schemes.

Office take-up in Newcastle city centre fell by 15% during 2016 to reach 220,000q ft at year-end. Tellingly, overall deal number was down year-on-year with 46 transactions completed in 2016, compared to 64 in 2015. Despite this however, total take-up in 2016 finished marginally below (1%) the long-term average for the city.

The 35,000 sq ft letting to Convergys at The Rocket in the Stephenson Quarter was the largest transaction of the year. Developed in partnership by Clouston Group and Newcastle City Council, the building reached practical completion in 2015 and forms part of the first phase of a £200 mixed-use development.

Following this deal, Regus acquired 12,875 sq ft at Cale Cross House, Newcastle Quayside. The occupation is over three floors and supplements existing Regus centres at Merchant House in the Cloth Market and Rotterdam House on Newcastle Quayside. Notably, this, combined with the Convergys deal meant that Business Services accounted for the largest proportion of city centre take-up in 2016, 22%.

The Technology, Media and Telecommunications sector continued to flourish in Newcastle over 2016 with the most significant letting being ZeroLight’s new lease of the entire Liveworks development on Newcastle Quayside.

Grade A availability fell by 26% during 2016 to reach 173,300 at year-end. This total is 23% below the long-term average. The development pipeline over the next two years consists of just 72,000 sq ft split across two comprehensive refurbishment schemes. With the first completion date not until Q4 2017, this means low Grade A availability will again be a feature of the market in 2017.

In 2016, prime headline rents increased by 5% to reach £23.00 per sq ft. This is the lowest prime rent of the major UK regional cities. We anticipate prime rents will increase to £24.00 per sq ft by year-end 2017.

ENDS

This was posted in Bdaily's Members' News section by Knight Frank .