Flight to quality | Q&A on Newcastle’s office market
Newcastle’s grade A office market is constrained and busy. Place North East spoke to Greg Davison, director at Savills, and Hannah Cusack, account director at workplace design company TSK, about the trends shaping Newcastle’s office market and how businesses are adapting to a constrained but resilient market.
What makes Newcastle an attractive office market at the moment?
Hannah Cusack: Newcastle and the wider North East are highly collegiate markets and there’s great depth and diversity of talent here. Businesses are increasingly focused on creating the kind of workplaces and opportunities that encourage people to stay in the region and build long-term careers. More than ever, companies looking to establish and grow in Newcastle recognise that a great working environment plays a huge role in attracting and retaining staff.
Like many regions there’s a lack of new office stock, but strong demand for high-quality space. We enjoy solving that puzzle; helping clients unlock the potential of existing buildings and creating workplaces that support the way people want to work today. Over the years, we’ve built strong relationships with local agents, occupiers and developers, and there’s a real sense of collaboration across the commercial property sector, with people genuinely invested in continuing to strengthen the region’s future and build on the city’s already thriving commercial landscape.
Having already delivered projects in the region for clients including LNER, Nexus HQ at The Spark and Irwin Mitchell, opening a delivery studio in Newcastle felt like a natural next step. It allows us to strengthen our presence in the North East and continue supporting the growing demand we’re seeing across the region.
And from Savills’ perspective, what key changes are you seeing in demand for office space in Newcastle?
Greg Davison: There’s increasing demand for furnished offices, particularly suites under 4,000 sq ft. Through discussions with businesses across the city, we know this trend is being driven by the need for flexibility, lower upfront capital expenditure, faster occupation, and access to shared amenities.
It’s also important to note that landlords are increasingly delivering speculative fit-outs across offices of varying sizes, often achieving rental premiums as a result. Grade A availability in Newcastle is currently less than 2%, standing at approximately 100,000–150,000 sq ft across a limited number of office buildings.
Coupled with the fact that market rents for new schemes have risen by around £10–£15 per sq ft over the last decade, it’s an exceptionally tight market. Businesses are finding creative ways to work around these constraints, and that problem-solving mindset is something I particularly admire about the Newcastle and North East market.
We’re also seeing out-of-town occupiers downsize, while city-centre occupiers are scaling up. Because of all these factors, the businesses that tend to prosper are those planning at least three years ahead. Overall, Newcastle city centre take-up has proven resilient, which I believe reflects the region’s strong macroeconomic position.
What are the main trends coming through in terms of what clients want from their workspace in Newcastle?
HC: Working with a range of sectors in Newcastle and the North East, we continually see four key priorities for clients looking at either upgrading existing office stock, or fitting out new premises. These are amenity and experience; sustainability; flexibility; and employee attraction and retention.
These attributes can be applied across both new and existing stock with the right planning and delivery strategy. We typically advise allowing at least three years to ensure these requirements align with the right location strategy in Newcastle and the wider North East. But beyond the physical features of a workspace, it’s equally important to understand the “why” behind the investment to ensure it delivers long-term value for the business and its people.
Are we seeing businesses compromise on location or specification due to limited grade A options in the city, or is there still a “flight to quality” even in a restricted market?
GD: We’ve identified a clear “flight to quality” as one of the major trends of the last three years in the North East. Many businesses are choosing the region as a place to relocate or expand because of the access to talent, and those best positioned to avoid compromise are the ones planning several years in advance. Occupiers are absolutely prioritising better office environments over simply reducing costs. Offices now need to actively support company culture, collaboration and employee experience.
While the restricted office market presents challenges, it also creates opportunities to look at existing building stock differently. Bringing older buildings back into use supports a healthier market and stronger city-centre economy. More people working in the city ultimately benefits retail, hospitality and the wider urban environment.
How are hybrid working models influencing space requirements in Newcastle compared to pre-pandemic expectations? How does this affect the design of offices?
HC: There has been a clear evolution in occupier behaviour across the region. In 2018, we saw the rise of co-working and flexible space, before the COVID-19 lockdowns forced businesses to adapt rapidly. Between 2021 and 2022 there were widespread return-to-office initiatives, while recent years have been defined by “right-sizing”.
We’re now entering a period of reimagining the office, and over the next few years I expect to see further optimisation. In many ways, businesses initially over-corrected during the pandemic and are now refining their long-term workplace strategies with the support of specialists who can help them better understand what they truly need from office space.
Data might tell you who is in the building and when, but the more important question is: what are people able to achieve when they are there? Working with business leaders and workplace experts is about defining why people gather and the outcomes they expect – whether that’s collaboration, learning or alignment. Only when that purpose is clearly understood does the office become a true strategic asset.
Understanding that “why” underpins the effectiveness of any office design, whether that relates to the layout, the functionality of the space or the location itself. Requirements will continue to evolve, but there will always be a need for people to come together physically in a workplace environment.
To what extent are ESG requirements and energy performance standards limiting the viability of older office buildings in the city?
HC: We’ve rightly come to expect high standards from our office buildings, and ESG and energy performance standards should be upheld regardless of a building’s age. Organisations are rethinking the purpose of the workplace, and as part of that, a quiet revolution is reshaping the regeneration sector: circularity. Moving beyond traditional refurbishment and fit-out approaches, leading developers and occupiers are embracing circular principles by designing spaces that minimise waste, reuse materials and extend the lifecycle of assets.
In a market shaped by ESG targets and cost pressures, circular workplace regeneration offers a compelling dual benefit: significantly reducing embodied carbon while unlocking financial efficiencies through material reuse and smarter design strategies. From modular interiors to reclaimed materials and digital material passports, the sector is moving away from a “build and discard” mentality towards one focused on reuse and regeneration.
This should never be viewed as a limitation. The industry is increasingly embracing this mindset, and I believe that will deliver long-term benefits. Older buildings in Newcastle can absolutely play their part and be brought up to a high standard. With the right teams involved, the process can be highly effective rather than restrictive.
Looking ahead, what does a “healthy” Newcastle office market look like over the next 3–5 years?
GD: As we’ve discussed, the office is evolving from a place employees are expected to attend into a destination employers must make attractive, efficient, and purposeful. Given that uncertainty is now a permanent feature of the market, the short-to-medium-term focus must be on remaining open, collaborative, and proactive to ensure the city continues to prosper despite wider market conditions.
My expectation is that demand will remain relatively steady for some time before settling into a more predictable rhythm. At that point, the focus will shift towards understanding how space can be utilised even more effectively. We remain in constant dialogue with businesses and stakeholders to keep pace with costs, market trends and the wider economic picture.
Flexibility and cost control are becoming increasingly critical, so businesses within the Newcastle office market need to fully understand what that means for their future plans. Ultimately, ongoing dialogue and market awareness will be key to ensuring informed decision-making across the sector.
