Regional office rents forecast to continue rising

This year’s second-quarter performance in the North East’s office sector showed take-up of space at a level not seen for over ten years, says The Offices Group of office agents. The total of 368,837 sq ft let across city centre and out-of-town space brought the total space let in the first six months of 2019 to 583,924 sq ft across 99 lettings.

Aidan Baker, director at BNP Paribas Real Estate said: “The significant letting of two buildings at Cobalt to Sage Plc and other important disposals at Belmont Business Park, DurhamGate North, Whitehouse Business Park and Team Valley continues to illustrate occupier confidence in the North East market and further reduces the supply of Grade A space out of town.”

Rents continue to rise within Newcastle city centre with another Central Square South grade A letting reported in the three months from April to June, which has consolidated 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,” says Michael Downey of Lambert Smith Hampton. “Typically the letting to HGF, the global intellectual property rights specialists, within Central Square South is another illustration that occupational appetite remains resilient despite the on-going economic uncertainty surrounding Brexit.

“The critical supply of Grade A space 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, which will be quoting £26 per sq ft.”

The Offices Group comprises Avison Young, BNP Paribas Real Estate, Bradley Hall, Cushman Wakefield, Gavin Black & Partners, Knight Frank, Lambert Smith Hampton, Naylors and Sanderson Weatherall.