Member Article

Prime Leeds office rents rise to £26 per sq ft as market flourishes

According to Knight Frank’s latest Regional Offices Market Portal (ROMP) report, pressure to spend among investors and evidence of the accelerating recovery in the occupier markets propelled turnover to its highest level since 2007 over the past three months.

Investment in the regional office markets reached £1.30bn in the last quarter, the highest seen in a single quarter since Q3 2007. Total volume for 2014 to date stands at £3.1bn, already eclipsing the annual total for each of the last six years.

Despite a substantial weight of money continuing to target regional office stock, pricing was broadly stable in Q3. Across the ten key regional markets, prime office yields held firm, with Leeds standing at 6.25%.

Meanwhile, the recovery in the UK’s key regional markets resulted in the office take-up in the last quarter being the highest in four years and 40% above the 5-year quarterly average. The take-up in Leeds was 143,451 sq ft, spread over 34 deals. That is a 42 per cent increase over the previous quarter.

This increased activity has led to rents for prime Grade A office space in Leeds rising to £26 per sq ft, their highest since 2009.

Henrie Westlake, head of Leeds office, Knight Frank, commented: “The impressive turnover during the past three months reflects an increase in buying opportunities, as some investors have sought to capitalise on significant price increases over the past 12 months. With evidence of rental growth returning, investor appetite is likely to focus more readily on well–located, short income stock where income can be enhanced through active asset management”.

This was posted in Bdaily's Members' News section by Robert Beaumont .