ONE of the potential problems that Liverpool city centre could be faced with is an under-supply of new-build offices over the next few years.

Jun 4 2008 by Tony McDonough, Liverpool Daily Post

Only 5 St Paul’s Square and 20 Chapel Street are able to offer newly-built space and, with no schemes due to start Šon site within the next 12 months, there will be no new space available in the city until mid-2011 at the earliest.

ŠGiven the facts that build costs are increasing at a much higher rate than prime rents, and the changes in empty rating legislation with many of the financial institutions not willing to lend on commercial developments in the current climate, it could be four or five years until we actually see any new speculative Šdevelopment in the city centre.

As a result, this could potentiallyŠ have a negative impact and hinder further inward investment and government relocations, as well as limiting further rental growth, leaving the city some way behind its regional competitors. Therefore, many occupiers will be faced with very little choice and will be forced to either negotiate pre-lets or acquire refurbished space.

This is symptomatic with what happened in Manchester city centre a decade ago.

It is likely that those good quality speculative refurbished buildings with large floor plates such as The Capital and the Plaza will hold the market together and will benefit from occupier relocations during the course of the next couple of years.

In terms of new development, those developers who are able to develop speculatively within the next few years are more than likely to reap the benefitsŠ given the potential undersupply.

ŠSpeculative development of new buildings is likely to have a positive impact on the market. It could fuel rental growth and assist with inward investment, and encourage relocations ensuring that Liverpool keeps pace with its regional competitors.