Liverpool office market feels impact from COVID-19
The Liverpool office market experienced a relatively strong start to the year, with the majority of the estimated 50,000 sq ft of deals in the city centre transacting within the first two months of 2020.
However, the impact of the UK lockdown started to take effect in March resulting in the overall take-up for the quarter being 50% lower than the 10-year quarterly average.
Law firm Carpenters, at No.1 Tithebarn, and Plus Dane Group at Atlantic Pavilion, were the two largest deals of the quarter, taking 16,017 sq ft and 15,000 sq ft, respectively.
According to Avison Young’s Big Nine report, which examines office take up and investment volumes across the UK’s nine largest cities outside of London, occupier sentiment was more positive at the start of the year, with a healthy number of large requirements in excess of 10,000 sq ft in the market.
These included BT (100,000 sq ft), MAERSK (15,000 sq ft) and Firesprite (20,000 sq ft), all of whom were actively seeking to acquire space or agree pre-lets during the latter part of this year.
However, occupational demand has significantly diminished since COVID-19 put the UK on lockdown and this is expected to have a substantial impact on deals in the second and third quarters of 2020.
In the investment market, Liverpool landed the largest inward investment deal of the quarter across the nine cities with Square Ape Ltd’s £40m purchase of 20 Chapel Street from British Airways Pension Fund
Principal within Avison Young’s Liverpool office, Ian Steele, said: “It was no great surprise to see a slow-down in transactional activity towards the end of Q1 due to the direct impact of the coronavirus crisis.
“The majority of occupiers are adopting a cautious approach, which is likely to result in requirements and relocations either being delayed or put on hold indefinitely.
“When the market does start to recover, though, one of the biggest challenges that Liverpool faces is supply, with available office space now at its lowest level for 20 years.
“There are currently no new schemes under construction in the out-of-town markets, and only The Spine on site in the city centre, approximately 50% of which is pre-committed.”
He added: “Developers are likely to require a significant level of pre-commitment from occupiers before bringing any future new schemes forward and that will be a huge challenge given the uncertain economic position we currently face.”
Avison Young’s Big Nine report covers the nine major cities outside of London: Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester and Newcastle.
