Member Article

Office take-up increases by 233% in Leeds

The first quarter of 2013 saw office take-up in Leeds increase by 233 per cent in Leeds, making it the best performing quarter since 2010, according to Knight Frank’s latest Regional Office Market Presentation (ROMP) research.

Take-up in Leeds rose sharply to 235,000 sq ft, with 32 transactions completed between January and March this year, compared with the quarterly average of 19 deals.

Average headline rents in Leeds are now £25 per sq ft, having fallen from £27 per sq ft at the height of the market. Net effective rents are £19 per sq ft.

The vacancy rate declined marginally to 9.0 per cent, despite available Grade A space increased to 300,000 sq ft by the end of March this year. Named active requirements also increased from 390,000 sq ft to 400,000 sq ft in the first quarter of 2013.

Elizabeth Ridler, partner specialising in office agency with Knight Frank in Leeds, said: “In Q1, there were two significant pre-lets including KPMG (61,250 sq ft) and Shulmans LLP (15,157 sq ft) whilst 71% of the lettings between January and March comprised deals under 5,000 sq ft.

“Office market activity continues to remain focused on the city centre, notably good quality refurbished space in a central location close to the station.

“There are still a number of active requirements outstanding, notably Sky 55,000-70,000 sq ft), Walker Morris (60,000 sq ft), DAC Beachcroft (30,000sq ft) and Squire Sanders (40,000 sq ft).”

She added: “Looking ahead, there is now an acute shortage of Grade A offices in the city centre. The only speculative development is being undertaken by Formal Investments but this is now on hold in the short term.

“The only two Grade A buildings in the city centre which can satisfy the larger requirements are Broad Gate and City Exchange. Falling Grade A supply will continue to put upward pressure on prime headline rents and anticipate that incentives will harden over the coming month.”

Henrie Westlake, head of Knight Frank’s Leeds office, concluded: “As predicted by Knight Frank last year, there has been a resurgence of interest in the UK regions from investors.

“Investors have been attracted by the attractive pricing and strong fundamentals. The diminishing supply in the regional markets, coupled with an almost non-existent development pipeline, bodes well for future performance.

“With sectors of the London market viewed as overheated by the impact of foreign investors, a growing number of Institutional Investors are looking to the regions.

“Whilst stock selection has never been more critical, there are genuine opportunities for well advised investors to find value in the key regional centres.”

This was posted in Bdaily's Members' News section by Mark Lane .