Commercial property consultants

Office occupier take-up across Leeds city centre totalled 109,682 sq ft in Q4 2016, a fall of 12% from the previous quarter.  Grade A space accounted for 71% of activity, illustrating occupiers’ continued appetite for modern office accommodation.  Professional and Financial Services continued to dominate the market, accounting for 48% of transactions combined. However, the TMT sector remains increasingly important, representing 24% of the total transactions.

Out-of-town, take-up was down some 50% on the previous quarter, reaching just 28,942 sq ft.  Indeed, 95% of all transactions were for space sub-5,000 sq ft, which explains the somewhat poor performance.  In line with the city centre, the TMT sector was a key contributor of activity, accounting for 50% of the transactions concluded. 

While the EU Referendum result may have dampened occupier confidence, the structural imbalance and lack of significant lease event activity was the greatest barrier to the growth of the city centre office market during 2016.  Conversely, the out-of-town market performed relatively well, up 14% on 2015’s total and above the 10-year average.

Following the completion of Central Square and No.6 Wellington Place, office availability across Leeds city centre saw a marginal increase in Q4 2016, rising to 1.36m sq ft. Grade A space accounts for 46% of total availability, the majority of which is located within the West End and Traditional Office Districts, albeit concentrated in a handful of larger buildings. There are currently four buildings under construction or refurbishment in the city centre, which will provide circa 285,000 sq ft of grade A office space during 2017.

At the start of 2017, the Retail District, Arena Quarter and South Bank had a circa 117,000 sq ft of grade A space available, spread across a number of smaller buildings. However, the progress being made by Vastint at The Brewery site and CEG at the Temple Quarter will have a major impact on the growth of the city centre’s emerging South Bank district.

Q4 saw rental growth within the city centre, with headline rents increasing to a new peak of £27.50 per sq ft at the recently completed Central Square.  While grade B rents remained relatively stagnant, rents for buildings that have been significantly refurbished have generally increased. Indeed, rents for good-quality, refurbished buildings are currently in the region of £25.00 per sq ft.

Office investment activity was subdued across Leeds during Q4 2016, with relatively smaller lot sizes transacted.

Indeed, all of the deals that completed were sold for sub-£10m, reflecting the sales that did not manage to transact before the year end.