Liverpool commercial district has seen no new grade A office space for more than a decade but now the city council is to invest £15m into Pall Mall to get the pipeline moving. Tony McDonough reports

Liverpool City Council is proposing a £15m investment that will help create the first grade A office space in the commercial district for more than a decade.

A report to the council’s cabinet is recommending a £15m investment package to restart the stalled 111,500 sq ft Pall Mall office project. This was due to go ahead with a pre-let from BT but the communications giant pulled out following the pandemic.

Costing a total of £55m, the development would rise to eight storeys and would also include a new urban park ground floor retail units. It will be built by Kier Property Developments and ready for occupation by summer 2028.

Liverpool’s commercial district has fallen behind other regional cities in recent years as its pipeline of grade A space has dried up. New space is seen as essential to attract blue chip occupiers.

Key to speculative development is headline rents. Developers and investors won’t take the risk unless they can see good returns in recent years Liverpool’s headline rent, currently at £29 per sq ft, has been seen as too low to kick-start new schemes.

In comparison Manchester’s £44 per sq ft headline rent has seen the city create a strong pipeline of space. Headline rents in Bristol are £48.40 per sq ft and in Glasgow £41.50 per sq ft.

In LBN this week veteran local lawyer, Gregory Abrams, urged the city to “build build build”. He echoed the long-held concerns of local property agents that the lack of grade A space was holding Liverpool back.

Although there has been new development across the city centre in the Knowledge Quarter, progress in the traditional office core has ground to a halt.

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. That also needed state support to get built.

Pall Mall sits within the proposed area for the Locally Led Development Corporation where the council, working with MHCLG, are looking to create an accelerated development zone.

Subject to approval from the Ministry of Housing, Communities and Local Government, funds from the city’s Strategic Futures programme, which covers an area from Bramley Moore Dock to Paddington Village, will be used to help bring forward the Pall Mall scheme.

This council-owned site was remediated in 2020, via funding from the Liverpool City Region Combined Authority, and a masterplan developed proposing three office buildings and a hotel surrounding a high quality new green space.

Phase one has however been delayed due to viability issues and the post-pandemic drop in office demand, a challenge shared with most UK core cities.

The cabinet report, which will be discussed on Tuesday, June 4, also proposes the council uses its covenant strength as owner of the site to provide a rent guarantee for 15 years on any unlet space to help improve development value.

This agreement would require Kier to secure initial occupiers (pre-lets) against a similar 15-year term for a minimum 40% of the building to help project viability. If fully let before completion in June 2028, the guarantee will fall away.

Cllr Nick Small, Liverpool City Council’s Cabinet member for Growth and Development, said: “This proposed investment would not just bring forward a top-quality Grade A office scheme and a new urban park in our business district, it will act as a catalyst to stimulate investor confidence in the city.

“We need to address the office supply and commercial rent catch-22 Liverpool has found itself in. Demand is now rising following the post-pandemic slump and we need to take advantage of that by unlocking supply.

“The Pall Mall scheme is oven-ready and could be open for business within three years, helping Liverpool to retain and attract major companies.”