Demand for office space in Liverpool city centre will disappear and go elsewhere if new grade A office space isn’t created in the city centre, commercial agents are warning. Tony McDonough reports

Liverpool city centre saw a 12.5% rise in take-up of office space in 2024, new figures show, but a chronic lack of new supply continues to concern agents.

According to the latest annual report by the Liverpool Office Agents Forum (LOAF), total city centre take up during the year reached 318,500 sq ft, a significant increase from 283,000 sq ft in the previous year.

Underlying this upward movement is a rise in the total number of deals, and an increase in the average ‘deal size’ for each transaction. There has also been a “flight to quality” with occupiers moving towards the best quality space available.

Largest deal of the year was Acorn Insurance’s purchase of Atlantic Pavilion in Royal Albert Dock, taking 45,985 sq ft for their own occupation. Fellow insurance operator Direct Line also moved into 16,984 sq ft of space at 1 St Paul’s Square.

Other highlights in 2024 included a flourishing creative sector, with Wushu Studios and Sentric Music taking 13,220 sq ft and 13,000 sq ft respectively at Walker House.

And the Home Office took 24,700 sq ft at The Capital Building and there was also a strong showing from shipping and professional services. Hapag Lloyd moved in to 8,850 sq ft and Mitchell Charlesworth 11,103 sq ft of workspace in The Plaza.

Headline rents grew more than 12% year-on-year to £29 per sq ft. However, the absence of any new grade A space, particularly in the central business district (CBD) continues to be a concern for agents.

It is now more than a decade since the last significant investment into grade A office space in Liverpool’s CBD. That was the St Paul’s Square development off Old Hall Street.

Despite the rise in headline rents they still remain too low to spark speculative development. For funders of office schemes it offers a measure of a return on investment.

In November Avison Young revealed Liverpool’s headline rent remains the second lowest in the ‘Big Nine’ office markets outside London, just ahead of Cardiff which offers £28 per sq ft. Manchester’s headline rent is £44 per sq ft with Bristol top at £50 per sq ft.

A number of schemes have threatened to emerge from the ground in the years since, most notably proposed office developments at Princes Dock in Liverpool Waters and Pall Mall, but none have become a reality.

Even the quality refurbished space pipeline has had its troubles. The much anticipated Martins Bank transformation now appears to have stalled. Owner Karrev remains silent on the prospects for the 210,000 sq ft scheme.

Knowledge Quarter Liverpool has unveiled its new Blueprint for Growth that will see a huge expansion in capacity, creating 1m sq ft of space but that will be laboratory space and office space aimed at science and biotech occupiers.

Tim Garnett, chair of LOAF, said: “Underlying numbers demonstrate a robust commercial market within Liverpool’s central business district. Take-up has increased from 2023 and the number of transactions taking place is arguably greater than before the pandemic.

“We are not without challenges in the marketplace, but fundamentals in Liverpool are strong. As a city we must be able to offer opportunities to large inward investors and employers, who are footloose across the regions.

“It is critical therefore that we see a push for improved supply, specifically in the heart of the commercial district.

“As a forum, we are predicting a positive 2025, with several large requirements due to land. However, this will not continue in the long term if schemes like Pall Mall do not come to fruition soon.

“Ready-to-occupy supply remains less than 500,000 sq ft and this is dispersed throughout the city and is of mixed quality.”

Serviced or managed office space continued to expand its presence in the city, with Bruntwood being the latest to expand its serviced space offering, occupying a further 5,400 sq ft at The Plaza.

LOAF is comprised of Keppie Massie,  Avison Young, B1RE, CBRE, Eddisons, Mason Owen, Mason and Partners, Worthington Owen, SK Real Estate, Hitchcock Wright, and Fisher German.