A new EG monthly feature seeks to showcase dealmakers across the UK commercial property sector. Utilising EG’s unique On Demand rankings, we’ll feature a top agent each month to find out more about the deals driving their activities.
Could it finally be time to put the debate on the future of the office to bed? After almost four years in which crises veered from existential to non-essential, have we reached the point where we can say with confidence exactly what occupiers want, and get on with the job of delivering that space?
For EG’s first dealmaker of the month, Knight Frank partner Patrick Matheson, the answers are evident. He believes in the North East’s office market, occupiers have largely decided what that future looks like and are signing off on deals accordingly.
He noted that decision-making has noticeably sped up after becoming “quite protracted” last year, when businesses appeared to be treading carefully. He ascribed the shift to local businesses becoming “a bit more settled about how they are going to work and how their offices are going to work in the future”.
A strong start
Newcastle-based Matheson has begun the year with a spring in his step, advising on almost 40,000 sq ft of space across seven deals during the first month of 2024. And, with new requirements of more than 230,000 sq ft emerging across the North East in the first six weeks of the year, he is confident the deals will keep flowing.
The strong start follows a strong finish. In Newcastle city centre rents reached a record of £32 per sq ft by the end of 2023, according to research from BNP Paribas Real Estate.
There are, however, concerns over where future office stock might come from. That £32 per sq ft record rental figure was driven partly by an ongoing flight to quality, but also reflected a squeeze in availability. Matheson says Newcastle city centre has no new buildings starting construction this year on a speculative basis.
There is more than 150,000 sq ft of prime grade-A office stock set to complete in Sunderland in June, boosted by Legal & General and Landid’s Maker and Faber office developments.
There is also a futuristic 100,000 sq ft office development in the pipeline in Newcastle city centre called the Pioneer, which Matheson believes will set the bar for quality and sustainability, although construction depends on a prelet.
More immediately, a 32,000 sq ft refurbishment at the scheme is set to hit the market as a leasing opportunity next month. Matheson is a fan. “The one I’m really excited about is the Pattern Shop in Newcastle,” he said.
Building on heritage
“This is a transformation of one of Newcastle’s really important heritage assets. It’s the building where Robert Stephenson built steam locomotives in the 1800s so it’s steeped in history, steeped in the fabric of Newcastle’s culture and it’s being completely repurposed into some very contemporary office accommodation.”
According to Matheson, local factors proved a strong driver in drawing people back to the office. “Newcastle and the other regional hubs, Sunderland and Durham are vibrant places and people like to be there,” he said. “They like to be back in the office to communicate and collaborate.”
He added: “We also have a very good transport network and road network around the cities of the North East so it’s very easy to commute, and I think that’s probably been a barrier in other, larger conurbations and in London.”
Key deals brokered by Matheson in January that helped him secure EG Dealmaker of the month included a 5,300 sq ft letting for law firm Knights Professional Services at Bank House. The 120,000 sq ft grade-A development on Pilgrim Street forms part of a wholesale redevelopment of Pilgrim Street, which includes a new five-star hotel and an office hub for HMRC.
Matheson also acted on a 13,000 sq ft deal at Rainton Bridge Business Park in Houghton Le Spring, with wind farm operator Banks Renewables taking up the space.
EG’s Dealmaker of the month is selected by EG based on deals submitted to EG Radius through our On Demand Rankings. Head to On-Demand rankings to find out how to submit your deals
