Market snapshot

Office Market Pulse Newcastle Q4 2012

Findings from our latest Newcastle Office Market Pulse show a fall in take-up in Q4 2012, as occupational costs and a lack of Grade A space continue to have a downward impact on activity. However, with several major requirements in circulation, we expect to see a brighter 2013.

To download a print ready PDF version of the Newcastle Office Market Pulse, click here.

In this issue:

Annual take-up levels down on 2011

After a strong start to the year, city centre take-up slowed considerably in Q4, reaching only 13,332 sq ft (Q4 2011: 23,362 sq ft).

The out of town market performed considerably better, resulting in a final quarter take-up of 181,925 sq ft (Q4 2011: 234,928 sq ft).

These results mean that 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 (2011: 762,724 sq ft).

Transactions for Grade B/C space dominated activity across both the city centre and out of town markets, with only 29% of total take-up comprising Grade A space; a reduction on the 2011 figure of 106,409 sq ft.

For a detailed breakdown of take-up by grade, please click here or on Chart 1 to the left of this article.

Significant occupational transactions in Q4 2012


Size Landlord (s)  Tenant / Purchaser 
Quorum 11,
Newcastle upon Tyne
26,310 sq ft  

Quorum Development
Partnership (Tritax)

Insure the Box
Partnership House,
29,700 sq ft Newcastle City Council Amec
Meadow, Lingfield Point,
48,000 sq ft Marchday Amec
Clavering House,
Newcastle upon Tyne
14,500 sq ft Robson Brown

Newcastle Business Village

Wellbar Central,
Newcastle upon Tyne
11,354 sq ft Siddiqui Family DAC Beechcroft

Source: Lambert Smith Hampton  

City centre options limited for larger occupiers

Total supply in the city centre office market currently stands at 1.1m sq ft, of which just 23% comprises grade A stock.

The city centre development pipeline is limited to the first phase of 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 in the city centre will be extremely limited.

Conversely, upwards of 4m sq ft of vacant space is available within the out of town market, of which circa 1.2m sq ft is of Grade A specification. The majority of vacant Grade A space is available within Quorum and Cobalt business parks in North Tyneside.

For a detailed breakdown of supply by grade, please click here or on Chart 2 to the left of this article.

Rental values remain static

Headline rents remain unchanged at £21 per sq ft in the city centre and £16.95 per sq ft out of town.

Wellbar Central commands the highest rents in the city centre and Quorum Business Park the highest in the out of town market.

Prime incentives remain at two to three months per year term certain.

For a breakdown of rental figures, please click here or on Chart 3 to the left of this article.

Investment performance remains subdued

Investor appetite continued to be subdued in the final quarter of 2012, with little evidence of prime investment transactions.  

A lack of suitable stock combined with no rental growth, depreciating capital values and the increasing difficulty to finance a purchase are ultimately restricting investment in the region.

To view our latest UK Investment Transactions (UKIT) report, please click here.


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