Partner Article

Second quarter office take-up ‘better than expected’

Office take-up across the North East for the second quarter (Q2) of this year, which reached nearly 130,000 sq ft, was better than expected say the recently rebranded North East Office Agents Forum (NEOAF) comprising the leading office agents, BNP Paribas Real Estate, Bradley Hall, Cushman & Wakefield, Gavin Black & Partners, GVA, Knight Frank, Lambert Smith Hampton, Naylors Chartered Surveyors and Sanderson Weatherall.

Patrick Matheson, partner, Office Agency, Knight Frank says the General Election caused some office decisions to be put on hold and of course there is Brexit uncertainty in the background too.

“City Centre take up was actually better than this year’s Q1 but what should be noted is the unusual rise in at 91,000 sq.ft (52%) of freehold transactions in Q1 was not repeated in Q2 where freeholds amounted to 32,000 sqft ( 36%), a more usual level,” says Mr Matheson.

Take-up across the region and in Newcastle’s city centre totalled 129,291 sq ft compared to 186,544 sq ft for the same period last year, a difference 57,253 sq ft, “but arguably it is a hard comparison as the same period last year was the second best performing 2nd quarter over a five year period and it included the 35,000 sq ft Convergys letting and 20,000 sq ft + Leeds Building Society at Cobalt,” adds Mr. Matheson.

Jessica Simpson, Senior Surveyor, Naylors says there remains a lack of Grade A supply within the city centre market and therefore “we are finding there is a continued demand for offices which have been refurbished to a high standard”.

She continues: “We are seeing that Landlords are now having the confidence to carry out refurbishments in order to meet the current demand. Examples of refurbished space include Gainsborough House and Earl Grey House on Grey Street and St Nicholas Building. As a result of the investment being made within buildings, Landlords are starting to see deals occur. “

Mr Matheson adds: “Speaking to a number of agents at the NEOAF meeting, though Q2 numbers are down there is a significant amount of space under offer at the moment. If this all completes there could be a bounce back next quarter. To a certain extent this also points to the issue we are facing about how long it is taking for deals to move from initial enquiry to contract.

“As there is no new Grade A space available the market awaits progress on Legal & General’s recent planning application for the first of its grade A office buildings at Newcastle Science Central. The 100,000 sq ft office building will create modern workspace for over 1,200 people in the science, technology and the knowledge sectors.

“Meanwhile the 60,000 sq ft Beam office building, Vaux, Sunderland, where Knight Frank and Naylors are joint agents, is currently coming out of the ground with a positive level of interest.

“Overall,” says Ms Simpson “the North East remains a very good location for business with excellent connectivity, city centre facilities and in general lifestyle. With the East Coast mainline due for much improved rolling stock in about a year there is much to look forward to.”

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