Market snapshot

Office Market Pulse Leeds Q3 2015

Leeds’ combined city centre and out of town office markets saw occupier take-up reach 184,417 sq ft across 56 deals in Q3 2015 – a marginal decline on the Q3 2014 figure of 198,263 sq ft. Final year take-up is expected to exceed the ten-year average, to reach circa 1.1m sq ft.

Total availability across the city centre and out-of-town office markets currently stands at circa 3m sq ft. However, 80% of this is of grade B/C quality and is not likely to be let without substantial refurbishment. While 386,000 sq ft of new build space due to complete during 2016 is yet to secure a pre-let, it is anticipated that much of this will be absorbed through the predicted spike in lease events over the next 12-18 months. 

More positively, Vastint's purchase of the 22-acre former Carlsberg Tetley brewery site offering the potential to develop a new city quarter at the heart of Leeds Southbank. 

You can download a PDF version of this Leeds Office Market Pulse, or to read and sign-up to Office Market Pulses from other UK centres, click here.

In this issue:

Out-of-town market records strongest quarter of 2015

Leeds’ combined city centre and out of town office markets saw occupier take-up reach 184,417 sq ft across 56 deals in Q3 2015 – a marginal decline on the Q3 2014 figure of 198,263 sq ft.

With the absence of any ‘big ticket’ deals or pre-lets - as witnessed during the first half of the year - the average deal size across both markets for Q3 2015 was unsurprisingly low, at 3,293 sq ft, which reflects the continued strength of the SME sector.

At 72,314 sq ft - 45% ahead of the Q3 2014 figure - the out-of-town market witnessed its strongest quarter in the year to date.

While momentum in the city centre slowed dramatically from Q2 2015’s record figure of 213,126 sq ft to 112,103 sq ft in Q3 2015, activity was down just 24% on the same period in 2014.

With one quarter remaining and several unsatisfied requirements in the city centre, total take-up for Leeds’ combined city centre and out of town markets in 2015 is expected to exceed circa 1.1m sq ft.

Forthcoming spike in lease events to wipe out new build supply

Total availability across Leeds’ city centre and out-of-town office markets currently stands just under 3m sq ft. However, 80% of this is of grade B/C quality and is not likely to be let without substantial refurbishment.

The dwindling supply of grade A space is magnified across the city centre market, with less than six month’s supply remaining, at 136 500 sq ft. While 386,000 sq ft of new build space due to complete during 2016 is yet to secure a pre-let, it is anticipated that much of this will be absorbed through the predicted spike in lease events over the next 12-18 months.

Key occupational transactions, Q3 2015


Property 

Size (sq ft) 

Landlord(s)/ vendor

Tenant

Unit 9 Temple Point
13,134

Bereta Properties
Northern Gas Networks
City West (Building 3)
12,306

Tiger Developments
Reed Elsevier 
Part FF, Avalon, Leeds Valley Park
10,265

Harbert Management Corporation
Smoothwall
17-19 York Place
9,898

LPA Receivers
Church of England

Source: Lambert Smith Hampton 

Leeds still represents excellent value to occupiers despite marginal rental increases

Prime headline rents in Leeds city centre are approximately £27.00 per sq ft; an increase of 4% from the start of the year but still a significant discount to other major regional cities, including Manchester at £32.00 per sq ft and Glasgow at £30 per sq ft.

Out-of-town, prime headline rents are £17.50 per sq ft which, again, is a marginal increase on the start of the year but still represents excellent value to occupiers.

Investment activity remains strong as value gap between London and the regions increases

The value of office investments transacted across Leeds during Q3 2015 totalled £73.58m – almost five times the volume transaction during the same quarter in 2014.

This burgeoning level of interest is driven by Leeds’ robust occupational market and the ever-increasing yield gap between London and the regions, which now represents solid growth potential.

View the latest edition of our UK Investment Transactions (UKIT) report.

Key investment transactions, Q3 2015


Property 

Value (£m) 

Investor

Vendor

The Round Foundry
31.50
Hermes REIM
Igloo Regeneration Fund
City Point, King Street
21.60
Redefine International
Aegon UK Property Fund
Lawnswood Business Park
17.25
Centurion Properties Ltd
Canmoor Asset Management

Source: Lambert Smith Hampton 

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Adam Varley

0113 887 6706

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Adam Varley
Director - Office Agency

0113 887 6706

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