Market snapshot

Office Market Pulse Leeds Q4 2012

Findings from our latest Leeds Office Market Pulse show a strong performance from the city centre and out of town occupier markets in 2012, as the combined annual take-up figure increased by 4.7% from the previous year and the city centre recorded its highest annual take-up since 2009.

To download a Print Ready PDF of the Leeds Office Market Pulse, please click here.

In this issue:

City centre take-up reaches three-year high

City centre take-up for Q4 2012 remained consistent with previous years, totalling 81,806 sq ft (Q4 2011: 87,050 sq ft). Demand was driven by smaller transactions, with no lettings in excess of 10,000 sq ft. This is a trend that has been witnessed throughout the year, with over 57% of all lettings sub-2,500 sq ft.

Despite a strong first half, take-up in the out of town market slowed in Q4 2012, reaching only 69,740 sq ft (Q4 2011: 110,667 sq ft). Transactions at Thorpe Park helped support the out of town market.

Encouragingly, the combined annual take-up increased by 4.7% on the previous year (2011: 679,653 sq ft), with the city centre recording its highest annual take-up since 2009, at 414,406 sq ft. Annual Grade A take-up fell slightly to 251,404 sq ft (2011: 278,625 sq ft), with deals at No. 1 Leeds accounting for 33%.

The prospects for 2013 look increasingly positive, with Q1 2013 set to transact circa 160,000 sq ft of Grade A space. A number of corporate occupiers approaching lease events are also currently considering pre-let options.

For a detailed breakdown of take-up by grade, please click here or on Chart 1 to the left of this article.

Significant occupational transactions in Q4 2012

Property  Size Landlord(s)  Tenant / Purchaser 
55 St Pauls Street 9,839 sq ft Freshwater Group DLA Design Group
105 Water Lane,
The Round Foundry
9,473 sq ft Igloo Elmwood Design Group
6th Floor, Toronto Square 7,057 sq ft Highcross CB Richard Ellis
1175 Thorpe Park 6,661 sq ft Thorpe Park Developments MITIE
No 1 Whitehall Riverside 6,454 sq ft NFU Mutual Makenzie Stewart

Source: Lambert Smith Hampton

Grade A shortage to trigger widespread refurbishments

Total supply in the city centre office market currently stands at circa 2m sq ft, of which just 29% comprises grade A stock. 

Out of town, grade A stock accounts for 44% of the total supply, which currently stands at just over 1.6m sq ft.

As grade A space diminishes and demand for poorer quality stock continues to fall, refurbishments of secondary stock will become progressively widespread, which will help fill the much needed gap in grade A availability.

For a breakdown of supply by grade, please click here or on Chart 2 to the left of this article.

Rise in city centre rental values

Headline rents in the city centre have risen from £22.00 per sq ft to £25.00 per sq ft. This is likely to increase further as the squeeze on grade A space in prime locations continues. Conversely, rents for grade C space have fallen to as low as £5.00 per sq ft in some instances.

As Grade A and good quality Grade B stock starts to diminish, incentive packages are expected to reduce, as occupiers begin to find it increasingly difficult to satisfy their requirements.

Rents in the out of town market have struggled to show any movement during 2012 and have remained static at £15.50 per sq ft. With the lack of any new build accommodation coming to the market and a diminishing supply of good quality space, rents on the most popular business parks in the region are expected to recover during 2013.

For a breakdown of rental values, please click here or on Chart 3 to the left of this article.

Investment activity falls by more than two thirds

Following the welcome investment activity in Q3 2012, this positive trend failed to continue into the final quarter, with total office transactions down by circa 68%. Key transactions included:

  • Pure Offices Limited acquisition of Icon Business Centre from Merchant Place for £4m. The deal reflected a net initial yield of 8.5%.
  • A UK-based private investor’s purchase of Abtech House, Park Row from BBHO Ltd for £1.1m. The deal reflected a net initial yield of 4.88%.

To view our latest UK Investment Transactions (UKIT) report, please click here.

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Adam Varley | Director - Office Agency | Leeds
Adam Varley

0113 887 6706

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Adam Varley
Director - Office Advisory

0113 887 6706

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