Liverpool’s office market is currently experiencing significant stagnation, with property agents urging for public sector intervention to reset the market and stimulate development.
According to the Liverpool Office Agents Forum (LOAF), the city saw only 23,879 sq ft of transactions in Q2, a sharp decline from the buoyant 95,905 sq ft recorded in Q1. This organisation, composed of property agents across the city, highlights that 900,000 sq ft of office space is vacant in the city centre, with a mere 12% being Grade A accommodation and only 7.75% located in the business district.
Gabriel Davies, associate at Fisher German and chair of LOAF, remarked, “I think the successful figures for Q1 this year and Q4 in 2023 put a plaster over the issues we are now facing. There has been some reasonable success with the gaming industry taking up office space, and continued churn in the professional services sector, but we are stuck between a rock and a hard place.”
The crux of the issue lies in the lack of new Grade A office space. Davies explained, “The lack of brand-new Grade A offices is having a negative impact on the market; however, it isn’t as simple as ‘build it and they will come’. Without a substantial headline rent that permits speculative office development, the city has witnessed stagnation in new office space within the commercial district, apart from several refurbishment schemes.”
The disparity between Liverpool’s headline rents and those of other regional cities is another significant factor. “A low headline rent in comparison to other regional cities means developers are looking elsewhere,” stated Davies. The cycle of low headline rent and lack of new build development needs to be broken to revitalise the market.
Davies advocates for a reset in the market through public and private sector partnerships, similar to successful developments in the Wirral. “A public and private sector partnership could result in the development of new offices. Without the luxury of an appropriate headline rent to promote development, a public and private sector partnership could be the catalyst for further development and to break the cycle,” he argued. This approach has proven effective in the Wirral, where public sector support has led to improved office stock quality, attracted new occupiers, and driven up headline rents.
Despite the worrying Q2 numbers, Davies remains optimistic about the future. “Several sectors have emerged over the past 12 months, notably the gaming and creative sectors, which has been crucial,” he said. Furthermore, the Liverpool City Region Combined Authority Corporate Plan aims to diversify the economy through strategic investments in health and life sciences, digital and creative industries, and advanced manufacturing.
Central to this plan is inclusivity, ensuring economic growth benefits all 1.6 million residents of the region. The plan emphasises addressing long-standing inequalities and removing barriers to opportunity through initiatives aimed at enhancing access to education, employment, and skills development. This inclusive vision could help modernise the city’s ageing office stock and attract new businesses or retain expanding companies seeking modern, adaptable spaces.
In summary, the stagnation in Liverpool’s office market highlights the need for a strategic reset through public and private sector partnerships. With a focus on inclusivity and strategic investments, there is optimism that the city can overcome current challenges and stimulate development.
