Following on from what was a very quiet H2 2016 in terms of occupier demand, the total volume of office space leased across Leeds during Q1 2017 reached 160,679 sq ft – an increase of 16% on the previous quarter but down some 39% year-on-year.
While the level of activity was mostly on par with previous quarters (41 deals in Q1 2017 compared with 44 in Q1 2016), the lack of larger deals was hugely noticeable, with 82% of all transactions for space sub-5,000 sq ft, compared with 67% in the same period last year.
The TMT and Professional Services sectors continued to increase their share of the market, accounting for 56% of the total number of deals, while there was a marked reduction from the historically active Finance, Banking and Insurance, and Public, Not-for-Profit and Charities sectors, which accounted for just 2% of the total number of deals. This has had a significant impact on the take-up figures across the Central Business District, which was more than half that of Q1 2016.
Despite this apparent ‘cooling’ across the more traditionally active areas of the city centre, momentum continues to build within the emerging South Bank district, reinforcing its potential as a catalyst for the future growth of the city. However, some form of investment from the public sector, such as the commitment to the delivery of the new HS2 station (Yorkshire Hub), will be required to stimulate further development.
Looking towards the second half of 2017, we expect conditions to improve as the upturn in enquiries witnessed in Q1 filters through into the take-up figures.