THE level of office take-up in Newcastle has risen to levels not seen since the recession and industry specialists believe a recovery is beginning.
City centre office take-up in second quarter of 2011 was 56,184 sq ft, more than double that of the first three months, and almost three quarters of total office take-up in 2010, which was approximately 80,000 sq ft.
Michael O’Driscoll, senior surveyor at DTZ in Newcastle, said: “Following a prolonged stagnant period in the occupational markets, we are beginning to witness early signs of recovery.
“Although the occupational markets continue to operate at a level well below the pre-recession heights of 2006, we are hopeful that this recent flurry of activity will provide a much needed injection of confidence and the beginning of a gradual but sustained period of recovery.”
And the second half of the year has got off to a flying start with BskyB’s announcement that it is going to be the first tenant in Wellbar Central. It has signed a deal to take 40,000sq ft across three floors for a new call centre creating 800 jobs.
The findings from DTZ echo the sentiments of the latest GVA quarterly report on city centre and out of town office take-up in the UK’s nine leading regional city markets.
These findings reveal that there has been a “reasonable” level of take-up in the second quarter of 2011, yet concern remains over the longer term.
The ‘Big Nine’ report shows that take-up in Bristol, Manchester, Liverpool, Leeds, Edinburgh, Glasgow, Birmingham, Newcastle and Cardiff has totalled 1.59 million sq ft, similar to the three-year quarterly average.
The report says: “A two-tier market is apparent in Newcastle and most provincial cities where funding constraints have slowed down the new development pipeline, grade A supply continues to tighten (enabling headline rents to stay firm), while secondary property remains in plentiful supply, thereby weakening average rental growth.”
Carl Potter, GVA’s head of office agency, said: “There is optimism that take-up figures for 2011 will be boosted by deals that are now looking well progressed – but in the longer term we are concerned that enquiries are thin.”
Recent Newcastle and Gateshead lettings have included Qubic Associates, represented by DTZ, taking part of the fifth floor of Central Square South, totalling 8,500 sq ft, on a 10-year lease.
This represents the largest open market city centre letting of Grade A office space in 18 months.
Baltic Place is continuing to attract occupiers with engineering firm Flexlife due to take occupation next month.
Flexlife is the eighth tenant at Baltic Place, a Developer South Shore Developments’ scheme on Gateshead Quays, with a further two tenants expected to be announced in the coming weeks.
O’Driscoll added: “Securing another high-profile tenant such as Flexlife is a major coup for Baltic Place. Flexlife will join major brands such as Michael Page and Santander which is testament to the quality of the building and its unique setting overlooking one of the UK’s most iconic riverscapes.”
The out of town markets have seen some significant activity already this year. Quorum Business Park in North Tyneside recently completed lettings of 10,500 sq ft and 18,300 to Home Group and MaCaw Engineering respectively.