Newcastle Office Market Holds Strong in Q2, Bucking UK Trend

Posted by Knight Frank Newcastle on 21st July 2020 -

Despite the disruption the coronavirus pandemic has caused across the UK office markets, overall take-up across the North East in April, May and June held-up fairly well, according to the latest figures.

In Newcastle city centre there was 35,272 sq. ft. of office space take-up across four deals in Q2, which is marginally above the Q1 total.

Total office take-up (city centre and out of town) for Q2 across the region was 226,327 sq. ft. This is compared to 201,956 in Q1 2020, which is a 12% increase. However, when compared to the quarterly average across 2019 (234,578 sq. ft.) this is marginally down - 3.5%.

Partner, Office Agency, at Knight Frank Newcastle, Patrick Matheson, comments: “We are buoyed by the quarter two data because Newcastle city centre has clearly held-up better than expected, especially compared to other UK cities but we’re cautiously optimistic because we know the figures include several deals which were due to complete in quarter one but were delayed.”

A new city-wide headline rent of £26 per sq. ft. was achieved at Newcastle Helix in the 19,000 sq. ft. letting at Lumen to Homes England. Other city centre deals included Pegasus Planning taking 3,200 sq. ft. at Gainsborough House on Grey Street and Samuel Knight International taking 9,838 sq. ft. at City Quadrant.

Out-of-town take-up hit 191,001 sq. ft. which was an increase of 14.27% from Q1. This was achieved in 15 transactions. Riga, the new 53,000 sq. ft. building developed by Gateshead Council, saw the most noteworthy deal with 30,000 sq. ft. being pre-let to Northern Gas and Power at a rent of £18.00 psf. Quorum also achieved several new lettings totalling 46,937 sq.ft which included 35,000 sq.ft to Shared Services Connected.

Patrick adds: “In terms of new enquiries, there were 30 new office requirements recorded across the North East market in Q2, which is encouraging. We are seeing office viewing requests increase week-on-week as pent up demand for office space that built during lockdown, converts into action.”

*Knight Frank operates in London (excluded from data), Aberdeen, Edinburgh, Glasgow, Newcastle, Sheffield, Leeds, Manchester, Birmingham, Bristol and Cardiff.