Our latest Leeds Office Market Pulse, which provides investors, occupiers and developers with detailed insight across the city centre and out-of-town office markets, revealed a phenomenal start to 2019 despite the on-going political uncertainty, with combined occupier activity up 6% year-on-year and 49% on the previous quarter.
City centre witnesses strongest Q1 take-up in six years
Looking at the sub-markets in more detail, the data shows that Leeds city centre witnessed its strongest performance in six years during Q1 2019, with a total of 222,318 sq ft transacted across 39 deals.
The out-of-town market also witnessed a steady first quarter performance, with take-up of 70,928 sq ft across 30 deals.
Reflecting the underlying confidence from corporate occupiers, six of the combined 69 deals were for space over 10,000 sq ft, the largest of which was fund administration solutions provider, Link Asset Services’ 71,000 sq ft acquisition at Central Square.
For the second successive quarter, TMT occupiers accounted for the lion’s share of activity, and with Channel 4’s announcement that it intends to acquire 25,000 sq ft at Rushbond’s Majestic this commitment is likely to act as a further stimulus for the continued growth of this sector in the Leeds region.
Looking ahead to the rest of 2019, activity is likely be restricted due to the lack of availability of grade A office space, this is particularly evident within the out-of-town office market where supply is extremely tight.
Speculative development critical to future growth
Total office supply across Leeds now stands at 1.8m sq ft, of which only 6.9% is of a grade A quality.
With only 296,941 sq ft under construction across four buildings in the city centre and a single 35,846 sq ft building office building out-of-town, occupiers are facing a rapidly diminishing choice of locations. As a result, we anticipate widespread rental growth across the city region during the rest of 2019.
While we will no doubt see a return to the pre-let market, most of this activity is likely to be focused in or around the South Bank district within the City Centre as VASTINT & CEG bring forward new speculative office developments. There is therefore a desperate need for new development/refurbishment projects to boost the supply chain in 2019.
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