Office leasing activity in Q3 in Liverpool, Leeds, Manchester and Newcastle was significantly up on the previous quarter, according to new data from Avison Young.
The firm’s latest Big Nine report, which tracks activity in Bristol, Birmingham, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester and Newcastle, showed Manchester recorded two of the top five largest city centre office deals outside of London in Q3 – BNY Mellon’s 196,443 sq ft lease at 4 Angel Square (pictured) and ARM’s 68,860 sq ft lease at No.1 Michael’s. Manchester also saw the greatest asset transaction volumes, accounting for 37% of activity in the Big Nine markets.
Liverpool also had a positive quarter, with Q3 lettings totalling 76,839 sq ft – a 108% increase compared with Q2 activity.
The leading drivers of demand in Manchester and Liverpool over the past year were the professional services, financial services, TMT and the creative sectors. Professional services and government were key drivers of activity for Leeds and Newcastle.
Avison Young said it expected take-up in the final quarter of the year to exceed Q3 levels in the Big Nine markets.
Chris Cheap, principal and managing director of transactions at Avison Young, said: “It’s encouraging to see our Northern cities performing well and having one of their collectively strongest quarters in recent years. BNY Mellon’s acquisition in Manchester represented the largest deal in the city since 2020, demonstrating that there is a real appetite for best-in-class office space and businesses are happy to invest if the quality is right.
“The office markets across Leeds, Liverpool, Manchester and Newcastle are very different but one thing appears to be a consistent challenge across them all – the shortage of Grade A stock. Developers remain cautious, with borrowing and construction costs still high and limited downward pressure on yields. Supply across regional markets in the short to medium term will be restricted without public sector intervention or significant market shift.
“Based on schemes currently under construction, we expect to see supply shortages in 2025, which will place additional upward pressure on prime rents. We may need to see a significant alteration in approach going forward, with developers setting an ‘entry price’ for new stock based on the mechanics of an appraisal, rather than rental tones which aren’t keeping pace with the needs of the occupational market and the cost of meeting them.”
