Demand for premium office space within Liverpool has never been higher with a record breaking 867,586 ft of office space transacted in 2018, the seventh year running where over 500,000 take ups have taken place. This translated to an increase of 32.7% against 2017.
However, despite the appetite for Grade A office space within the city, currently only 336,388 sq ft is ready to be occupied and is of B or B* quality. This lack of high quality office stock means that both investors and potential tenants are having to keep a close eye on the market to source the right opportunities for their portfolio or business.
Rental values for grade A space have remained incredibly consistent with headline rents at around £20.50 per sq ft. This is mainly due to the fact that this is existing, potentially tired stock. However a forthcoming introduction of new Grade A space is likely to increase this, with forthcoming opportunities for Grade A accommodation now pitched at £25 per sq ft.
However there is now no vacant Grade A stock within the City Centre. This lack of option has seen the Grade B*sector perform at a level which has over-reached Grade A, with city buildings achieving in excess of £20 per sq ft, which is likely to drive new Grade A stock rental levels higher still.
With significant rent growth across the majority of the regions, some landlords are starting to re-invest in their assets to provide an improved offer for occupiers who are becoming more selective with their requirements.
A growing demand for serviced offices in Liverpool
Start-up culture has exploded within the UK, with flexible office space and serviced offices driving a small but significant share of the market.
In a digital era, where so many work functions can take place remotely, or be outsourced, SMEs are increasingly turning to more flexible office space that meets with their company objectives, reducing overheads and staffing costs.
This sector made an impression in 2018 with take up accounting for 10% of the office space let within the city centre. To put this into perspective, the public sector made up 47% of take up, professional services 17%, Creative/IT/Media 4.5% and Finance and banking 4%.
Liverpool Commercial Market
Investment in Liverpool’s commercial stock in 2018 was most of the most active ever, with sales totalling over £181m.
This is the seventh year running that take-up has achieved in excess of 500,000 sq ft and shows continued confidence in Liverpool City Region as a place to thrive economically, whilst attracting and retaining the best talent.
Liverpool remains an attractive location for investors as they seek to benefit from better yields than many other regional cities, alongside supportive levels of occupation.
Serviced office and co-working spaces are proving incredibly popular with tenants thanks to a shift in working practices, making this type of asset of particular interest to investors looking for attractive rental yields.