NEWCASTLE’S office take-up at the end of this year’s third quarter is 10% up on the equivalent period a year earlier, according to a leading property advisor.
Research carried out by BNP Paribas Real Estate (BNPPRE) shows office take-up reached 482,610 sq ft, compared with 440,150 sq ft in 2011.
Newcastle’s out of town (OOT) office market, with its larger floor plates and wider choice of newer office accommodation, remained the most active market with total take-up of 342,345 sq ft recorded between the first and third quarter this year.
This was 25% higher than the equivalent period a year earlier. However, at 140,265 sq ft, total city centre (CC) take-up for the first nine months of 2012 was down 18% on 2011.
This is due to smaller deals sustaining the market, although there are signs of some larger inquiries beginning to come through.
Aidan Baker, director of office agency at BNP Paribas Real Estate’s Newcastle office, said: “The market has so far fared reasonably well during another tough year.
“Looking ahead, we predict that the fourth quarter may be quieter than last year and the CC will face a challenge to match last year’s level of take-up. One key trend in 2012 is the increased proportion of grade A space acquired within the CC is some 25% higher than last year although this will be partly due to generous incentives making space more affordable.”
BNPPRE’s research also revealed that overall, total grade A availability at the end of the third quarter was 1.58m sq ft, which was similar in level to the same quarter the year before, even though CC grade A availability has recorded a downward trend. Interestingly, the OOT market has seen its level rise following building completions at the former Enterprise Zone scheme, in particular at Cobalt Park.
Baker added: “In relation to Newcastle’s headline rent, it remained unchanged in the third quarter this year at £20 per sq ft.
“CC incentive levels continue to remain favourable, with tenants currently negotiating three years rent free on a straight 10-year term.
“For shorter five-year leases, tenants are expecting to receive in the region of 12-18 months rent free. At £16.95 per sq ft, the Newcastle OOT headline rent also remains unchanged.”