Office markets in Liverpool, Leeds, Manchester and Newcastle have all experienced Q3 office
take-up levels significantly above those seen in Q2 of this year, according to data from Avison
Young.
As seen in the global advisory firm’s latest Big Nine report, 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 NOMA, 4 Angel Square and ARM’s 68,860 sq ft lease at No.1 Michael’s. Manchester also
saw the greatest asset transaction volumes, accounting for 37% of the whole Big Nine.
While in the out-of-town market, Newcastle landed the largest letting, with a deal in Leeds
coming in third – Spire Healthcare Limited taking 30,783 sq ft at Spectrum 7, Seaham and NG
Bailey’s 25,230 sq ft deal at Arlington Business Centre, White Rose Park, respectively.
Liverpool also had a positive quarter, with lettings totalling 76,839 sq ft – a 108% increase
compared to Q2.
Take up in the last quarter of the year is expected to exceed Q3 levels, ending the year on a high
and leaving prime rental growth to remain elevated.
The leading drivers of demand in Manchester and Liverpool over the past year were the
professional services, financial services, TMT and creative sectors, which accounted for 58% and
72% of take up, respectively. Professional services and government were drivers for Leeds and
Newcastle, as well as financial services and manufacturing and industry, respectively.
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 cities covered in Avison Young’s Big Nine report include: Bristol, Birmingham, Cardiff,
Edinburgh, Glasgow, Leeds, Liverpool, Manchester and Newcastle.
To access the full report, click here.