Member Article

Office deals up by 30% in Leeds

The UK’s regional occupier markets made a positive start to 2014, reflecting a revival in occupier sentiment during the past 12 months, according the latest research by leading global property consultancy Knight Frank.

In Leeds, on the back of improving sentiment, occupier activity in the office market rose 30% in terms of the number of deals, compared with the first quarter of 2013.

Elizabeth Ridler, partner specialising in office leasing at Knight Frank’s Leeds office, commented: “While there is a shortage of Grade A office space, there is still a steady demand for good quality refurbishments, such as the newly completed Minerva House, and the forthcoming ones at 9 Bond Court, and East Parade, all of which provide floorplates of between 5,000-6,500 sqft which have dominated take-up over the last 10 years.

“The city has a very limited supply of available Grade A office space, caused by a lack of speculative development. This was largely responsible for the 40% fall in the amount of floorspace taken up in Q1, which must also be seen in the context of 2013’s record level of leasing activity.”

Additionally, incentive packages have begun to harden, with landlords offering 9-12 months rent free on a five-year lease where they were previously offering 18-24 months rent free at the start of 2013.

In the investment market, total volumes outside London and the South East reached a healthy £735 million in Q1, 28% above the five-year quarterly average, albeit 35% down on Q4 2013’s impressive total.

Despite very strong demand for regional offices among the UK Funds, volumes are being constrained by a lack of stock, as landlords opt to hold rather than sell.

Henrie Westlake, Knight Frank’s investment specialist based in Leeds, commented: “While the rate of yield compression is expected to ease, it is likely to constitute the main driver of investment performance in 2014. Moving forward, however, we expect performance to be driven more on the income side, as the recovery in the occupier markets accelerates and rental growth becomes more widespread.”

This was posted in Bdaily's Members' News section by Clare Burnett .