Liverpool office block comes to market with offers invited over £18.7m

Knight Frank is undertaking the sale of a key office building in the heart of Liverpool’s business district.

Shelborn Asset Management acquired No. 1 Tithebarn for £7m in 2016, and the property is being marketed at a price of more than £18.73m, a net initial yield of eight per cent.

The property, which was built in 1980, is a core multi-let office comprising 112,805 sq ft net lettable area with offices across ground and six upper floors and retail at ground level.

A major refurbishment scheme was undertaken in 2008 including the creation of a new entrance off Tithebarn Street and an extensive refurbishment of the office space and common areas. More recently the landlord has undertaken refurbishment of some floors, reception and common parts.

Headline rents for the building currently stand at £17 per sq ft, offering a significant discount against prime rents in Liverpool and room to drive rental income throughout the building.

Recent arrivals include Liverpool law firm High Street Solicitors which took 14,875 sq ft of space to accommodate its growth.

No. 1 Tithebarn sits above, and has its own entrance to, Moorfields Merseyrail station. A full range of city centre amenities are available within a few minutes’ walk of the building, including the Liverpool One retail and leisure complex and the rich culture of the world famous waterfront.

Liverpool has undergone a structural change on the supply side with approximately 1.5 million sq ft of office space converted to hotels and residential accommodation since 2015. This, combined with strong levels of take-up, has seen the total supply of vacant space fall from 2.5 million sq ft to around 500,000 sq ft.

Approximately 150,000 sq ft of the remaining vacant accommodation is ‘Grade D’ space that is not expected will be refurbished and occupied as offices again. Of the remaining 350,000 sq ft about 200,000 sq ft is what could be classified as ‘Grade A/Grade B*’ space, ie good quality refurbished space, so the supply of office space remains extremely tight, despite the impact of the pandemic.

For the five years up to the pandemic (2015-2019), office take-up averaged at 385,000 sq ft per annum, driven by strong local demand and some notable inward investment, such as BDO, Taylor Wessing and Park Group.

Demand has clearly been impacted by the pandemic and was just 200,000 sq ft in 2021, due to the absence of larger transactions. The SME market has been surprisingly active for the past 12 months and larger organisations are now looking at relocation, plus some sizeable inward investment enquiries, so take-up is expected to be much stronger for 2022.

The imbalance between demand and supply has led to rental growth – even during the pandemic – at buildings such as The Plaza, Royal Liver Building, Exchange Flags and at 1 Tithebarn.

A Knight Frank spokesperson said: “We are already seeing more requirements from both occupiers and investors in Liverpool, as most businesses return to the office, as their primary work place.

“No. 1 Tithebarn has had some good success in terms of new lettings over the past couple of months, which gives investors confidence.

“With the final letting in legals, the building will be fully let to a number of blue chip businesses and we expect to receive a good level of investor interest, with Liverpool yields offering a significant discount to Manchester.”