Take-up of office space across the North East totalled 368,837 sq ft in the second quarter of 2019; the best performing quarter in over a decade, according to our latest North East Office Market Pulse.
Occupational appetite remains resilient
In Newcastle city centre, 21 lettings completed within the three months to June totalling 46,010 sq ft, down some 14% on the same period in 2018. In contrast, it was a record breaking quarter for the out-of-town market, with 322,827 sq ft of office space let across 32 transactions.
This brings the total space let or sold across the city centre and out-of-town markets combined during the first half of 2019 to a phenomenal 583,924 sq ft.
Standout deals for the quarter include software giant Sage’s letting of two buildings at Cobalt Business Park totalling 203,728 sq ft, marking the largest out-of-town office letting ever recorded across the North East.
Key occupier transactions
|Property||Size (sq ft)||Tenant/Purchaser||Landlord/Vendor|
|Cobalt 23, Cobalt Business Park||125,912||Sage Plc||Highbridge Properties|
|Cobalt 22, Cobalt Business Park||77,816||Sage Plc||Highbridge Properties|
|Ground Floor, Traynor House||15,600||Repairify UK Ltd||North East Commercial Limted|
|Magistrates Court, North Allerton||13,635||North Yorkshire County Council||The Court Service|
Grade A supply reaches ‘critically low’ levels
The supply of grade A space across Newcastle city centre has reached critically low levels and currently stands at 126,260 sq ft.
This has provided occupiers with limited options in the city allowing landlords to remain bullish on terms offered with incentive packages tightening. We expect this trend to continue throughout the year ahead of the delivery of ‘The Lumen, Newcastle Helix’ in December.
Rents continue to rise despite on-going economic uncertainty
Rental levels continue to rise within Newcastle city centre, with another letting at Central Square South consolidating the headline rent of £24.50 per sq ft previously set in Q1 2019.
Grade A incentives are beginning to tighten in the short term as net effective rents drive forward. The letting to global intellectual property rights specialist, HGF within Central Square South is another illustration that occupational appetite remains resilient despite the on-going economic uncertainty surrounding Brexit.
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