Hermes Real Estate Investment Managers has confirmed it has secured its first letting at its recently refurbished Pearl building in the centre of Newcastle. The addition of an extra 36,000 sq ft comes as one leading agency says that a “serious lack of space” in the city will almost certainly push up rents.
Once the home of an insurance group, the landmark Pearl building on New Bridge Street West has been marketed following a year-long, £3m upgrade. It now offers a total of 36,364 sq ft of space over seven floors, including the 16,602 sq ft Forum, designed specifically around the needs of smaller businesses.
Gavin Black & Partners, which is acting for Hermes, has now signed a 10-year lease with The Royal British Legion for 2,550 sq ft. The veteran’s organisation has agreed a stepped rental agreement, with an initial rent of £16 per sq ft.
“We have had a great deal of interest in this superbly finished building,” commented agency partner, Chris Pearson. “This extensive refurbishment has delivered exceptional space which includes air conditioning with heating and cooling, high efficiency lighting with automatic controls, new double glazed windows with solar control to South and West elevations and a remodelled main entrance and reception area.”
Stephen Bradley is asset manager at Hermes Real Estate. “This letting at The Pearl is a positive indicator of the lettings market in Newcastle and a direct reflection of the occupier-led leasing policy that we have adopted,” he said.
Seen as the first in a new wave of office schemes underway in Newcastle, many property consultancies are still finding it hard to fill the gap between demand and delivery.
“There has been an absence of new office development over the past five years and with the exception of the Stephenson Quarter, behind Newcastle central station, there is very little in the way of new stock coming forward in the city centre,” explained Simon Taylor, head of office agency at Naylors Chartered Surveyors.
“As companies now have the confidence and spending power to upgrade and expand, the issue will become increasingly prevalent. Fortunately there are new schemes such as Maling Exchange at Hoults Yard, on the fringe of the city centre, which will be delivering 45,000 sq ft of new office space this summer.”
But, Taylor cautions, the conversion of former office buildings to student accommodation has taken older stock out of the market on sites previously earmarked for office development.
“There are only a small number of sites where new offices may still come forward, but whether this kind of development will proceed on a speculative basis is questionable and it is more than likely that some kind of pre-let will be required.
“In the meantime the dwindling supply of Grade A offices in Newcastle will become more sought after and this is reducing rental incentives and pushing up asking rents.”