Findings from our latest Newcastle Office Market Pulse show that that after a strong start to the year, city centre take-up slowed considerably in Q4 2012 reaching only 13,332 sq ft compared to 23,363 sq ft in Q4 2011.
The results also show that the total annual take up for the Newcastle office market stands at 750,541 sq ft, a fall of 1.6% against last year’s total of 762,724 sq ft.
Out of town market performs better than city centre
The out of town market performed considerably better than the city centre, with the final quarter take-up for 2012 at 181,925 sq ft (Q4 2011 234,362 sqft). Transactions for Grade B and C space dominated activity across both the city centre and out of town markets, with only 29% of the total take-up coming from Grade A space.
Limited options for larger occupiers
Darron Barker head of office for LSH in Newcastle said: “City centre options are limited for larger occupiers. The total supply in the city centre office market stands at 1.1m sq ft of which only 23% is Grade A stock and this will continue to be a concern.
“The city centre development pipeline is limited to the Stephenson Quarter, which will provide 30,000 sq ft of new office space. With several significant lettings expected to complete during 2013 the available options for larger occupiers will remain extremely limited.
“Out of town upwards of 4m sq ft of vacant space is available of which 1.2m sq ft is Grade A specification the majority of which is situated at the Cobalt and Quorum business parks in North Tyneside.”
Increased demand expected for 2013
Tim Powner head of office agency at Lambert Smith Hampton added: “During 2013 we anticipate increased demand from those companies consolidating their office functions and we will also witness a growing number of inward investment requirements as corporate occupiers look to the North East as a viable and cost effective business location.”
Headline rents in Newcastle remain unchanged at £21 per sq ft in the city centre and £16.95 per sq ft out of town.
To view the full version of our latest Newcastle Office Mark Pulse, please click here.