The Tyneside office sector has continued to offer more positives in 2012, with demand and take-up led largely by the lettings market.
Last year, the market was dominated by sub 5,000 sq ft deals, yet 2012 has started, and continued with, an increase in requirements for stock in excess of 10,000 sq ft which is certainly encouraging.
The highlights so far have been large deals both in the city centre and out of town, such as lettings at Wellbar Central in Newcastle’s city centre and a total of 14,000 sq ft let at Gateway West on the Newburn Riverside – both give cause for confidence.
In a market that is still cost driven, interest for both city centre and out of town office accommodation has increased in the last six months.
However, we are at present in the stage of the market cycle where we are witnessing a compression of new Grade A stock, particularly in the city centre. This could potentially lead to an increase in rental levels, unseen for the last four years, so businesses are advised to secure deals now to avoid disappointment later.
Looking ahead, the only new office development on the horizon seems to be the initial phase of Stephenson Quarter which includes 35,000 sq ft of Grade A offices, together with a hotel and a multi storey car park.
There are some great opportunities for parties to capitalise on high quality existing stock. For instance, we are marketing jointly with GVA around 30,000 sq ft of Grade A space at Partnership House in Gosforth new onto the market. Possibly one of the most impressive office buildings in the North East, this accommodation is fully fitted and available immediately.
Elsewhere, there has been a healthy supply of Grade B stock flowing through the market, with landlords looking at refurbishment activity to create opportunities to do deals.
It’s safe to say that overall the picture for the office market has improved, both in term of deals done and enquiries coming through.
However, limited development will continue to put pressure on the supply of Grade A space and until speculative development underpinned by pre-let activity makes a return to the sector, activity will be centred on existing bricks and mortar.
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