Demand for office space in Newcastle falls back in 2010

King Sturge report anticipates increase of take-up in 2011 as economic sentiment improves

Article posted: 03 Mar 2011

According to King Sturge’s recent national office overview, the office space market in Newcastle suffered in 2010, impacted by the lack of larger public sector acquisitions. Demand decreased by 39% in 2010 compared to 2009 figures which is 12% below the five-year average, with a total take-up in 2010 of only 445,000 sq ft.

The out-of-town market dominated with the most notable occupier transactions taking place at Quorum Business Park (pictured) where Balfour Beatty took 41,000 sq ft and Insurethebox.com took 13,000 sq ft.

At the end of 2010, Newcastle has an estimated 3.1m sq ft of available office space which was an increase of 31% from the end of 2009 and resulted in a 10.7% vacancy rate.

Subsequently prime headline rents in the city centre have fallen 4% to £20 per sq ft while out-of-town rents remain at £16.95 per sq ft. King Sturge predicts that the downward trend in the city centre is expected to continue in 2011.

In terms of investment in the City, although total transactions are down there continues to be an appetite from the institutional buyers for prime offices with strong fundamentals, including solid tenants, realistic rents and modern buildings with long lease terms.

Commenting on the findings, Simon Taylor of King Sturge’s Newcastle office said: “After a strong 2009, demand fell back in 2010. The lack of larger public sector acquisitions has a significant impact. In 2011 we expect incentives will continue to increase, particularly out-of-town. Some city centre occupiers will move out-of-town to take advantage. Overall availability will increase, largely due to public sector sub-letting or expiries. We hope to see take-up increase, as economic sentiment improves and occupiers take advantage of the excellent deals available in the current market.”

For breaking news relating to office space in Tyne and Wear follow us on http://twitter.com/officespacenews

Posted by Janet