City’s grade-A problem

18/06/2012

SGS'S move into Brewery House at the Maltings represents one of the largest commercial property transactions in the city this year.

As well as providing a boost to the commercial property market, the move is likely to benefit other city centre businesses, such as retailers and restaurants, as it brings more than 100 additional potential customers to their doorsteps.

But as one of the last remaining large "grade-A" office spaces in the city centre, is there now enough quality space to go round?

Nick Pearce, of PPH Commercial, said: "There is now very limited quality office space remaining in the city centre.

"At the larger end of the scale, above 5,000sq ft, the only quality space that remains is at Two Humber Quays – where there is 11,000sq ft – and Wilberforce Court – where there is up to 20,000sq ft.

"There are no speculative office spaces being built. There are one or two with planning consent, but these won’t get started in the current climate.

"In Hull, this will create difficulties as it will stifle the market."

Carl Bradley of Clark Weightman said the problem was the quantity of available space did not necessarily meet the demands of occupiers.

He said: "The fact that a large chunk of office space at Brewery House has been taken is a positive as it means a company has moved into the city centre.

"However, it does mean there is now very little space left of a significant size, particularly grade A.

"If a company is looking to relocate to a northern city and is looking at Hull as well as other locations, the lack of space locally may mean we miss out."

Tim Powell, of Scotts, said he felt a more pressing problem was the vast amount of office buildings from the 1960s and 1970s that need investment.

He said: "Perhaps the council could concentrate on what incentives and support it can offer to attract businesses and investment back to the centre.

"In terms of grade A office space, there is a shortage, but companies should consider what is appropriate for them.

"For many organisations, grade B space can offer good quality premises with many desirable factors and in terms of rent is more cost-effective than grade A."

Dave Garness of Garness Jones said lack of quality space was not being helped by current market conditions.

He said: "The biggest risk for developers is empty property rate liability. Many developers and landlords would like to see empty rates abolished but this is not going to happen anytime soon.

"But construction is well known as one of the best ways to inject growth into an economy, which for the Government would outweigh the costs of funding such a development.

"If a speculative development didn't happen then the Government would not get revenue through empty rates anyway, so there is a clear argument for backing schemes and lifting empty property rates."