The big cities of the North saw a boost in office take-up levels in Q3 as appetite for “best in class” space continues to grow, the latest data from Avison Young has revealed – though there are still fears about levels of Grade A stock.
The advisory firm’s latest Big Nine report showed Manchester secured two out of the top five largest city centre office deals outside of London in Q3, with BNY Mellon’s 196,443 sq ft lease at 4 Angel Square and ARM’s 68,860 sq ft lease at the landmark No.1 Michael’s. The report showed Manchester also saw the greatest asset transaction volumes, accounting for 37% of the whole Big Nine.
In the out-of-town market, the North East landed the largest letting, with Spire Healthcare Limited taking 30,783 sq ft at Spectrum 7, Seaham. NG Bailey’s 25,230 sq ft deal at Arlington Business Centre, White Rose Park, Leeds, was the third largest.
READ MORE: {}
Avison Young said Liverpool also had a positive quarter, with lettings totalling 76,839 sq ft – up 108% on Q2. It said that in Manchester and Liverpool, the leading drivers of demand over the past year have been professional services, financial services, TMT and creative sectors. The markets in Leeds and Newcastle were driven by professional services and Government, with manufacturing and industry also strong in Newcastle.
Chris Cheap, principal and managing director of transactions at Avison Young, said: “It’s encouraging to see our Northern cities performing well and having one of their collectively strongest quarters in recent years. BNY Mellon’s acquisition in Manchester represented the largest deal in the city since 2020, demonstrating that there is a real appetite for best-in-class office space and businesses are happy to invest if the quality is right.
“The office markets across Leeds, Liverpool, Manchester and Newcastle are very different but one thing appears to be a consistent challenge across them all – the shortage of Grade A stock. Developers remain cautious, with borrowing and construction costs still high and limited downward pressure on yields. Supply across regional markets in the short to medium term will be restricted without public sector intervention or significant market shift.
“Based on schemes currently under construction, we expect to see supply shortages in 2025, which will place additional upward pressure on prime rents. We may need to see a significant alteration in approach going forward, with developers setting an ‘entry price’ for new stock based on the mechanics of an appraisal, rather than rental tones which aren’t keeping pace with the needs of the occupational market and the cost of meeting them.”
The key regional statistics
The cities covered in Avison Young’s Big Nine report include: Bristol, Birmingham, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester and Newcastle.
Most Read
In Manchester Q3 take-up reached 632,088 sq ft, – the highest quarterly figures since 2019, 8% above the 10-year Q3 average and 25% higher than the previous quarter.
Avision Young said Q3 take-up was stronger in the city centre market which was 31% above the 10-year Q3 average, while the out of town market was 22% below average.
Key deals in the quarter included:
- BNY Mellon’s 196,443 sq ft lease at NOMA, 4 Angel Square
- ARM’s 68,860 sq ft lease at No.1 Michael’s
- Teleperformance’s 23,065 sq ft lease at the Bond
The prime rent remained unchanged quarter-on-quarter at £44 per sq ft.
In Newcastle and the North East, take-up totalled 186,595 sq ft, 71% above the Q2 figure and 3% below the 10-year Q3 average.
City centre leasing was 18% below the 10-year average whereas out-of-town was 3% above.
Key deals of the quarter included:
- Spire Healthcare’s 30,783 sq ft lease at Spectrum 7
- LNER’s leasing of 16,454 at 1 St James Gate
- Cundall Johnston & Partners LLP’s 10,161 lease at Bank House
Don’t miss
Prime rents remained unchanged at £32 per sq ft.
Liverpool’s Q3 take-up totalled 76,839 sq ft, 48% down on the 10-year Q3 average and double the previous quarter’s figure.
The Big Nine report showed city centre take-up was 39% below the long-term average, whereas out-of-town take-up was 57% below.
Key deals of the quarter included:
- The Home Office’s 24,672 sq ft lease at The Capital Building
- Mitchell Charlesworth’s 11,103 sq ft lease at The Plaza
- Acorn Insurance’s 7,932 sq ft lease at Edward Pavilion
The city’s prime rent remained unchanged at £28.50 per sq ft.
In Leeds, Q3 take-up reached 259,265 sq ft, 77% above the previous quarter’s figure and only 4% below the 10-year average.
The report showed city centre leasing was 16% lower than the 10-year average, whereas out-of-town was 39% above. Some 40% of Leeds’s office take-up was for Grade A buildings up on 21% in Q2 2024.
Key deals included:
- NG Bailey’s 25,230 sq ft lease at the Arlington Business Centre
- University of Law’s leasing of 15,241 at Yorkshire House
- Wizu Workplace’s 13,860 sq ft lease at One Embankment
Prime rent rose 2.6% quarter-on-quarter to £39.00 per sq ft.
Like this story? Why not sign up here for free to get the latest business news straight to your inbox.