Newcastle reports strong demand for office space - commercial mortgages

28 February 2007

Commercial office space in Newcastle is coming under increased demand as a growing number seek commercial mortgages in order to secure office space in the city.

The latest Regional Office Markets Presentation from Knight Frank reveals that demand for office buildings in Newcastle increased by more than in any other city in the UK last year, strong indication of a boom in Newcastle''s commercial property sector.

It is thought that this growth in demand will lead to a surge in commercial mortgage activity in Newcastle as more businesses look to finance commercial property investment.

Alongside these findings a decline in rental yields was recorded in 2006, falling by 125 basis points to 4.75 per cent. Experts maintain that a reduction in yields is indicative of a lack of supply in Newcastle offices, further bolstering demand.

It is speculated that yields will continue to fall into 2007. Dickon Wood, head of investment at property agent Knight Frank states that yields will carry on in this trend in the short term, but should ease as some point.

"You would be a brave man to bet against that not continuing, at least in the short term," he told the Journal. "There must be a point where that will stop."

Land Securities recently announced a slowdown in growth in traditional property investment markets.