Avison Young’s Big Nine quarterly review of take up in the major UK regional office markets once again reports a strong level of performance for Newcastle
While most markets saw activity fall below average levels; Bristol, Cardiff and Newcastle were notable exceptions.
Demand for the best space continues to put pressure on headline rents, and as a result many Big Nine markets experienced rental growth during Q1.
Following an exceptionally strong final quarter, take-up in Newcastle city centre unsurprisingly slowed during Q1. However, take-up was still over 40% above the quarterly average level totalling an impressive 69,912 sq.ft.
The professional services were the most active sector during the first quarter, accounting for 83% of city centre activity. Key deals within the sector included Clifford Chance which leased 15,182 sq, ft at The Lumen, and AECOM which signed for 10,360 sq. ft at One Trinity Gardens.
Total City Centre availability across all grades reduced by 8% during Q1 and now totals 527,377 sq ft. As a result, the vacancy rate also reduced, moving inwards from 4.8% to 4.4%.
At present there is just one development under construction in Newcastle that has availability. Bank House is due to complete in the first quarter of 2023 – and will provide Newcastle with an additional 120,000 sq. ft of Grade A office space.
During Q1 prime office rents in Newcastle city centre increased by 6% and are now at £27.50 with rent free periods remaining at 18 months on a ten-year term.
In the out-of-town market, there was significantly more activity with take-up totaling 127,235 sq ft. This was driven by a large deal of 31,853 sq. ft at Feethams House, Darlington, to a confidential tenant, as well as several professional services and government & services deals.
Tony Wordsworth, Director, Avison Young, Newcastle comments:
“Demand for the best quality space has not eased over Q1. As pressure on headline rents continues, many Big Nine markets experienced rental growth with the average net effective rent increasing by 3% in only three months.”
