Q1 office take-up falls in Newcastle

Less than 35,000 sq ft was let in the city centre in 2024’s first quarter, according to BNP Paribas’ Big Ten regional office market update.

The decentralised market fared better, with 117,379 sq ft let. Both figures are down year-on-year however, by 9.3% in the city centre and 5.6% out of town.

Vacancy in the market stands at 10.7%, with grade A vacancy at 2.8%. As the consultancy said, the completion of Bank House in 2023 provided Newcastle with much needed top-level space, with deals such as Knights’ letting 5,382 sq ft in January at £30 per sq ft showing demand is there for the best product.

Encouragingly, more grade A product is on the way: as BNP Paribas outlined, completions are close at the Pattern Shop, East Quay 5 and One Trinity Gardens, worth a combined 140,000 sq ft of grade A space, “which will likely generate stronger deal activity in the remainder of 2024”.

Beyond that, the supply looks thin, with just the Pilgrim Quarter space already accounted for by HMRC due in 2025. The potential for refurbishments to drive rents thus looks strong, and indeed Newcastle’s year-on-year rental growth of 10.2% (to £32 per sq ft) outstripping the regional cities’ average of 7.6%.

Although the out-of-town take-up figure is down year-on-year, it is still 22.5% ahead of the 2023 quarterly average. Energy companies figured prominently, with Northern Powergrid taking 29,165 sq ft at Riverside House – the quarter’s largest deal – and ABCA Systems committing to 6,000 sq ft at Cobalt Business Park.

BNP Paribas’ full regional office market report can be viewed online.