Boost for Liverpool office market as demand rises

The Liverpool City area saw 412,000 square feet of lettings in 2021, up 46 per cent on the previous year, according to research by the Liverpool Office Agents Forum.

Preview

Total take-up in the Downtown Commercial District in 2021 was 261,179 square feet, while out-of-town transactions totaled 151,141 square feet.

The biggest downtown contract of the year was with the DWP, which took 20,020 at 90 Duke Street. Out of town, Santander signed the largest lease, taking 15,000 square feet at Alaska House in Atlantic Park.

The bigger picture

Although the 2021 results are an improvement over 2020, they are still down from pre-pandemic levels. In 2019 and 2018, about 600,000 square feet of deals were signed in the city area, according to Avison Young’s Big Nine report.

In 2017, a take-up of just under 1 m² was recorded.

The dynamics of the offer

Downtown office supply stands at 604,008 square feet at the end of 2021, a 22% increase in availability in 2020, according to LOAF.

Liverpool’s lack of supply, which has long worried office workers in the city, was helped by Kinrise’s acquisition of the 210,000 square foot Martins Bank Building last August.

The building was previously intended for a hotel scheme, but Kinrise’s decision to deliver office space there has given a much-needed boost to Liverpool’s office pipeline.

“Kinrise’s recent purchase of Martin’s Bank for office purposes reaffirms confidence in the market,” said Andrew Byrne, director of CBRE.

“This injection of availability will be essential in the short term as the Grade A development problem persists. Hopefully new record rents in this building will kick off the next phase of redevelopment.

Learn more about Kinrise’s plans for the Water Street listed building.

Rental prospects

As supply increases, headline rents continue to rise in the city area, according to LOAF.

Many buildings in the city center fetch upwards of £20/sqft per square foot, while the highest rent on record in 2021 was £25/sqft at the recently put up for sale Royal Liver Building.

Out-of-town markets have seen steady growth in rents over the past year, with many markets hitting between £12/sqft and £14/sqft throughout the year, according to LOAF research.

The view of the experts

“The level of demand for office space increased significantly in 2021 as occupiers became more confident that the early 2020 restrictions were unlikely to return,” Byrne said.

“Occupant focus has shifted again to focus on quality of space, amenities in the development and how the office can align with the occupiers’ ESG strategy. This is leading to a flight to quality with a number of key buildings regularly achieving rents above £22/sqft.

Jon Swain, Partner at Mason Partners, said: “As office occupancy is vital to the health of a city’s wider economy, it is very encouraging to see growing demand and improving rental levels. both in the CBD and in the Liverpool City area as the economy continued to recover from the pandemic.

“These welcome numbers should provide a solid backdrop for further market strengthening during 2022.”

Liverpool Office Agents Forum is made up of CBRE, Hitchcock Wright, Avison Young, Worthington Owen, Mason Owen, Keppie Massie, Mason Partners, Eddisons, Matthews & Goodman and B1 Real Estate.

Jose C. Birney