Market snapshot

Office Market Pulse Newcastle Q4 2015

While occupier take-up in Q4 2015 was markedly down on the previous quarter, office market activity in Newcastle city centre was still above the ten year average of 252,000 sq ft for 2015 as a whole, driven largely by activity within the technology, media and telecoms sector.

Demand remains strong and, consequently, those companies with requirements over 10,000 sq ft over a single floor are faced with an ever decreasing choice of available grade A space. This, combined with the ongoing take-up of obsolete or poorly located office buildings for student accommodation, is likely to spur the refurbishment of grade B space.   

The stage is now set for a further increase in the headline rental level to around £23.00 per sq ft during 2016 following Ernst & Young’s letting of One CityGate East at a new headline rent of £22.00 per sq ft in Q4 2015.  

You can download a PDF version of this Newcastle Office Market Pulse, or to read and sign-up to Office Market Pulses from other UK centres, click here.

In this issue:

Annual take-up surpasses 10-year average

Total occupier take-up across the Newcastle city centre office market reached 261,128 sq ft in 2015; the highest annual take-up for two years and above the ten year average of 252,000 sq ft.

Looking specifically at the final quarter of 2015, occupier take-up totalled 52,094 sq ft, which is consistent with the amount of space transacted in the first half of the year but less than half the Q3 figure of 107,819 sq ft.

The technology, media and telecommunications sector remained the most acquisitive sector, followed closely by a strong performance from the professional services sector. 

Looking ahead to 2016, there are some strong requirements in the market, including several over 25,000 sq ft, which will boost take-up figures considerably.

Less than one year’s supply of grade A space

The availability of grade A office space has become very tight in Newcastle city centre, with 113,531 sq ft currently available equating to less than one year’s supply. Most of this space is single floor plates of less than 10,000 sq ft, which poses a significant issue for any major corporate looking to locate or expand in the city.

No new space is currently under construction and just two new schemes have come to the market recently; The Rocket, extending to 35,000 sq ft and Live Works, extending to 14,320 sq ft. Despite strong interest in The Rocket it remains available at a rent of £23.00 per sq ft. 

The most likely location for new development remains Gallowgate, where MASH Developments has just submitted a planning application for a mixed use scheme including 100,000 sq ft of offices.

Key occupational transactions, Q4 2015


Size (sq ft) 

Landlord / Vendor

Tenant / Purchaser

One CityGate East
Ernst & Young
Maybrook House 
City & Northern
Thompsons Solicitors
4th Floor Cross House
Cross House Holdings
Nigel Frank International

Source: Lambert Smith Hampton 

EY set new headline rent at One CityGate East

A new headline rent of £22.00 per sq ft has now been set with the letting of One CityGate East to Ernst & Young. In addition, a rent of £23.36 per sq ft has been agreed for a small suite of 1,070 sq ft at Citygate House. This compares to a headline rent of £21.50 per sq ft at Q4 2014; a level which was equalled earlier in 2015 with iParadigms letting at Wellbar Central. 

Incentive packages are still at around 9 months’ rent-free for a five-year lease.

Investment market shows no signs of abating

The investment market remains very active and shows no signs of abating. Q4 2015 saw the biggest volume of city centre office investment transactions for some years, with two major grade A buildings sold in December for a combined value of over £61.5m.  

There are solid levels of stock available and we’re seeing increasing demand as the investors search for better value in the regions.

View the latest edition of our UK Investment Transactions (UKIT) report.

Key investment transactions, Q4 2015


Value (£m) 

Yield (%) 



Wellbar Central
 6.04 Orchard Street Investment Management
Moongate Holdings
Central Square
21.60  6.4 UK CPT Ltd
Parabola Estates

Source: Lambert Smith Hampton 


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