LIVERPOOL faces a shortage of Grade A office space, which will impact on its ability to attract blue-chip occupiers to the city.

That’s the view of Mike Stares, director of Rumford Investments, owner of the 20 Chapel Street office building.

The site currently has around 52,000 sq ft left across four floors out of a total floorspace of 155,000 sq ft.

Rumford is pushing to have the building fully let by the end of this year.

The only other significant amount of Grade A space in Liverpool’s central business district (CBD) is at the final phase of St Paul’s Square.

That is scheduled to be completed in the spring, and will bring 109,000 sq ft of office space onto the market.

Liverpool’s current stated headline rent is £21 per sq ft. Rents reached £22 per sq ft at 20 Chapel Street prior to the credit crunch and recession.

However, Mr Stares believes the real figure, once incentives are taken into account, to be around £18 per sq ft.

And he says that is not a high enough level to make new schemes viable. He added: “That is the difficulty Liverpool has going forward.

“If you want to attract occupiers from outside, then you will need more Grade A space, but rents under £20 per sq ft are not going to pay for new- build.

“Funding is all but impossible to get at this time. Hopefully that will come back because the city needs more new- build.”

His comments were echoed by Neil Kirkham, a partner at Liverpool commercial agency Hitchock Wright & Partners, one of the agents at 20 Chapel Street.

Mr Kirkham is generally optimistic for the city’s office market as a whole, but agrees the lack of Grade A availability going forward was a problem.

He was speaking following the publication of the Liverpool Commercial Office Market Review 2010, compiled by Liverpool Vision and Professional Liverpool.

It showed a huge drop in lettings in 2010, but an increase in the actual number of transactions. Lettings across the city totalled 393,441 sq ft – down from 721,189 sq ft in 2009.

However, the study points out that 2009’s figure was boosted by two major city centre lettings totalling 380,000 sq ft. They were the UK Borders Agency, at The Capital, and Merseytravel, at Mann Island.

Those deals meant that total central business district take-up last year was down from 519,274 sq ft in 2009 to 207,515 sq ft last year.

However, when those two deals are stripped out of the 2009 figure, it drops to 159,274, making the 2010 figure 30.3% higher.

Mr Kirkham told LDP Business: “It has been a tough couple of years for the city, but I think we are now finding a level. I think we have seen rental levels creep back up and a hardening in the incentives on offer.

“In terms of Grade A, if you took a snapshot today then you might say we had enough but going forward, it is not going to be enough.

“In 2007, we were getting £22 per sq ft and we all hoped it would kick on from there, but then the city was hit hard.

“We need more new-build, but until rental levels get back up then it is not going to stack up.”

Take-up in 2010 in the city fringe – just outside the CBD – was 53,846 sq ft, down from 70,695 sq ft in 2009, according to the report.

It says: “The network of historic terraces and modern conversions close to the city centre continues to prove attractive to the creative, media and information technology sector.

“However, take-up in 2010 appears to have been influenced by the availability of affordable space in the CBD.”

The report also said Liverpool’s out-of-town market remained stable in 2010. Take-up in business parks in Liverpool and Knowsley totalled 132,080 sq ft, barely changed from the 2009 figure of 131,220 sq ft.

Stuart Keppie, chairman of Professional Liverpool’s property group, said: “In spite of the on-going challenging economic circumstances, there were encouraging signs for Liverpool’s office market in 2010.Š

“Take-up in the city centre revealed an increase in the overall number of transactions and a more robust indigenous market than 2009.Š

“The overall supply of Grade A and Grade B office accommodation remains high in the city, but there was a reduction in available supply of Grade A space in the out-of-town markets of Merseyside, with little new space becoming available.”