Market snapshot

Office Market Pulse Leeds Q3 2014

The Leeds office market showed an increase in demand in Q3 with a total of 148,317 sq ft of transactions recorded within the city centre, a 47% increase in take-up compared to the same quarter last year. There is a greater requirement for grade A office accommodation.

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In this issue:

Demand for high quality office accommodation rises

The Leeds office market showed an increase in demand in Q3 with a total of 148,317 sq ft of transactions recorded within the city centre, a 47% increase in take-up compared to the same quarter last year.

18 deals (50% of all transactions) acquired grade A office accommodation and only two deals (5%) acquired poorer quality grade C accommodation.

The SME sector continues to dominate the market with 75% of deals recorded acquiring space of less than 5,000 sq ft.

Total take-up for the city centre at the end of Q3 stands at 392,824 sq ft. With a number of larger corporate lead transactions set to complete within the final quarter, the city centre office market is set to have yet another strong performance in 2014.

The out of town markets have been subdued and in the absence of any single large transaction, take-up has been weak at 49,946 sq ft with an average transaction size of 2,940 sq ft.

A return to speculative development in city centre

Q3 saw the return to speculative development within the city centre market with Central Square, Wellington Place, 6 Queen Street and 3 Sovereign Square all starting on site. The combined 449,780 sq ft will bring much needed grade A stock to the market in 2015, 2016 and 2017.

Building refurbishments are continuing to help address the imbalance of supply and demand in the city centre for grade A space. Bond Court is the principal focus for much of this activity.  Following the recent completion of Minerva House, Evans Property Group is nearing completion of the refurbishment of Capitol House. 9 Bond Court, St Paul’s House and 1 East Parade are all undergoing major refurbishments which will provide the market with more immediate grade A space.

The out of town markets remain relatively stagnant with an oversupply of grade B and C space. In the absence of any development activity, the availability of grade A space continues to diminish.
  

Significant Leeds office lettings Q3 2014

Property 

Size (sq ft) 

Landlord(s)/ vendor

Bridgewater Place 27,289 Eversheds
2 Wellington Place 17,500 MEPC
West One 8,229 Bruntwood

Source: Lambert Smith Hampton

Incentives reducing across all grades

City centre and out-of-town rents remained static at £25 per sq ft and £16 per sq ft respectively in Q3.

Incentive packages are now reducing across all grades of property. However, this is more pronounced for grade A and good quality, well located grade B space. As the markets continue to recover we expect this trend continue and rents to start to increase.
  

Office investment on track for a strong year

Total investment in Q3 2014 for the Leeds office market was 23.96m. This is down 67% on the equivalent quarter in 2013 but a significant increase from Q2 2014. With a strong start to the year office investment volume to Q3 was at £130m which remains higher than the 2013 total.

The most significant transactions were:
• The sale of 116 Wellington Street, Leeds for £8.76m to Portman Estates reflecting a net initial yield of 5.58%.
• CBRE Global Investors purchase of 6/7 Park Row for £7.5m reflecting a net initial yield of 7.94%.
• Bridges Ventures purchased Barclays House, 6 East Parade for £5m reflecting £111 per sq ft.  

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Adam Varley | Director - Office Agency | Leeds
Adam Varley

0113 887 6706

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Adam Varley
Director - Office Agency

0113 887 6706

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