Prime office rents up in Newcastle but yields soften, says Knight Frank
Quoting rents in Newcastle have broken £30/sq ft and the best floors at Motcomb Estate’s Bank House are marketed at £32, according to Knight Frank research.
Two prelets were achieved totaling 25,000 sq ft and since completion in April two further lettings have been agreed, alongside a new headline rent of £29/sq ft. Barclays and Oliver Wyman are among the occupiers signing up. The building offers 120,000 sq ft of BREEAM ‘excellent’ space over 12 floors.
The wider East Pilgrim Street development includes under-construction HMRC office of 465,000 sq ft for 11,000 staff and the conversion of a historic police station into a five-star hotel. Knight Frank said the “combined scale of development on East Pilgrim Street will be transformational for the city.”
H1 take-up was 86,213 sq ft, down 32% on the first half of 2022. There were 22 deals recorded. Grade A supply rose 22% to 333,700 sq ft.
On the investment side, volumes reached £41m in the first half of the year, up 7% on H1 2022.
Prime yields are 6.25%, compared to 5.75% at this stage last year. The year-end forecast is weaker, Knight Frank said in its UK Cities Mid Year Review 2023.