Q1 2021 Newcastle office market update - The Spark Let in part to Womble Bond Dickinson Photo Credit: Ryder - Sanderson Weatherall
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The Spark
Q1 2021
Let in part to Womble Bond Dickinson Newcastle office market update
Photo Credit: Ryder
Q1 2021 Snap Shot
54,980 sq ft 104,666 sq ft 9
Newcastle City Centre take-up Newcastle Out of Town take-up Newcastle City Centre deals
(Q1 2020: 34,819 sq ft) (Q1 2020: 187,418 sq ft) (Q1 2020: 11)
Total Take-up
400,000
350,000
Key Transactions 300,000
250,000
200,000
150,000
Occupier Size (sq ft) Property
100,000
Womble Bond Dickinson 44,700 7th to 11th floor, The Spark
50,000
Green Energy Consulting 10,223 Barratt House 0
Total Gas & Power 3,446 4th Floor The Pearl Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2018 2019 2019 2019 2019 2020 2020 2020 2020 2021
City Centre Out of Town
Key Data Q1 2021 170,179 sq ft £26.00 psf 150,000 sq ft Newcastle City Centre Take-Up Prime Rents Grade A supply (rolling 12 months basis) 551,941 sq ft £16.00 5.75% Newcastle Out of Town Office Take-Up Prime Out of Town Rents Prime Yields (rolling 12 months basis)
Q1 2021
Demand
Q1 North East office market take-up totalled 159,646 sq ft across 34 deals in the
three months from January to March.
In the city centre, nine deals totalling 54,980 sq ft were concluded in Q1 including
one transaction totalling 44,700 sq ft which saw Womble Bond Dickinson acquire
Grade A office space across five floors at The Spark. The quarters take up was
up by 70% on the same time last year and was also significantly better than the
previous quarters total.
The out-of-town market saw 25 deals with a total take-up of 104,666 sq ft, which fell
short of the five yearly quarterly average. The key out-of-town transactions were
Green Energy Consulting purchasing a self-contained 10,233 sq ft building known
as Barratt House and Instant Office Group acquiring 7,944 and 7,637 sq ft at Kings
Court, North Shields and Dunedin House, Stockton respectively.
Supply
Grade A city centre supply remains at circa 150,000 sq ft of space currently
available. This is expected to increase over the next 12 – 24 months with the
delivery of both The Spark and Bank House.
Out of town supply has remained stable. Quorum and Cobalt Business Park’s
availability stands at 200,000 to 300,000 sq ft per park with headline rents at
£16.00 psf.
One St James PlaceQ1 2021
Rents
City centre prime rents are £26.00 per sq ft, the benchmark being confirmed in
a letting during Q1 to Womble Bond Dickinson at The Spark, Newcastle Helix.
Out of town prime rents stand at £16.00 per sq ft.
Outlook
The last quarter has highlighted an increase in demand for city centre grade A
and B stock. Out of town remains resilient, particularly across the out of town
business parks which offer an ‘own front door’ option.
We forecast the market to continue in an upward trend as the vaccine continues
to be rolled out. The flight to quality and downsizing exercise continues to be
the key trends highlighted within both the city centre and out of town markets.
With a number of new build schemes coming forward in the city, the increase
in post pandemic demand and the ‘return to the office’ ethos are key topics
institutional landlords are keeping track of, as they hope reinvigorated occupiers
will soak up the new supply.
Refurbished schemes will now start to come forward again, albeit with a different
mindset and thought process compared to pre Covid-19. New ideas, initiatives
and outlook on a project are required to capture the new wave of thinking from
occupiers, who will continue to review their property strategy over the next 12
months.
The Lumen
Michael Downey, Partner Central Square South, Orchard Disclaimer: No part of this publication may be reproduced or
transmitted in any form or by any means without the prior written
michael.downey@sw.co.uk Street,
consent of Sanderson Weatherall. It is based on material we believe to
07894 411871 Newcastle upon Tyne, be reliable. Whilst every effort has been made to ensure its accuracy,
NE1 3AZ we cannot offer any warranty that it contains no factual errors.
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