Market snapshot

Office Market Pulse Leeds Q1 2013

Findings from our latest Leeds Office Market Pulse show a 56% increase in take-up in Q1 compared to the same period of 2012, with over 70% of demand focused on grade A stock.

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In this issue:

Leeds’ office occupier demand increases by 56%

Leeds’ city centre office market has proved healthy in the first three months of 2013. Take-up increased by 51% compared with the same period last year, totalling 235,001 sq ft (Q1 2012: 155,847 sq ft).

Leeds’ out of town market also witnessed a dramatic uplift in activity, with a first quarter take-up of 96,574 sq ft - almost double the same period last year (Q1 2012: 56,021 sq ft). 

This brings the first quarter total for the entire Leeds office market to 331,575 sq ft, a rise of 56% on the same period last year (Q1 2012: 211,868 sq ft).

Demand continued to be driven by smaller transactions, with more than half of the total activity for office space below 2,500 sq ft.

Demand for grade A space remained strong, with over 70% of take-up focused on this sector of the market.

For a detailed breakdown of Q1 2013 take-up by grade, please click here or on Chart 1 to the left of this article.

Key Leeds office lettings Q1 2013

Property  Size Landlord(s)  Tenant / Purchaser 
The Mint  73,100 sq ft Deltalord

Dart Group (Jet2)

1 Sovereign Square  61,250 sq ft Muse

KPMG LLP (pre-let)

Building 2200, Thorpe Park  17,033 sq ft Thorpe Park Leeds

Balfour Beatty Group

No 10 Wellington Place  15,157 sq ft MEPC Shulmans LLP (pre-let)
Tomlinson House, Capital Park  10,800 sq ft Sterling Capital Hermes

Source: Lambert Smith Hampton

Leeds’ lack of grade A office space triggers pre-let resurgence

Leeds’ city centre availability levels reduced by 7% in the first three months of 2013, to 1,911,258 sq ft (Q4 2012: 2,069,852 sq ft), of which only 25% is of grade A quality.

Despite the high levels of demand for grade A space, availability in this sector has been maintained with the apparent revival of the pre-let market, including deals to KPMG at Sovereign Street and Shulmans at Wellington Place.

With c.5.7m sq ft of lease events expected to take place between 2013-2016, occupiers will compete for a decreasing choice of grade A office space.  If absorption rates continue in line with Q1 figures and with no new developments on the horizon, occupier demand is likely to outstrip supply by the end of the year.

For a breakdown of Q1 2013 office supply by grade, please click here or on Chart 2 to the left of this article.

Rise in Leeds' 'stagnant' out of town rental values

Headline office rents in Leeds city centre have risen from £23.00 per sq ft to £25.00 per sq ft, as a result of KPMG’s pre-let at Sovereign Street.

For the first time in six months, rents in Leeds’ out of town market have shown a slight improvement, rising to £16.50 per sq ft (Q4 2012: £12.50 per sq ft). This was achieved at Tomlinson House, Capitol Park. However, this figure remains consistent with the same period last year.

For a breakdown of Q1 2013 office rental values, please click here or on Chart 3 to the left of this article.

Leeds’ office investment activity remains sluggish

Office investment activity across Leeds was limited to one single transaction during the first quarter of 2013.

Welbeck Estates Company’s acquired 13-14 South Parade from Glentrool Estates Group for £5.1m. The deal represented a net initial yield of 6.8%.

To view our latest UK Investment Transactions (UKIT) report, please click here.

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Adam Varley
Director - Office Agency

0113 887 6706

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