Legal and financial firms set to drive Leeds office market
THE time has now come for speculative office development to start “in earnest” in Leeds for the first time since the recession, according to a property expert, who also says major firms such as PwC and Addleshaw Goddard are mooting plans to relocate.
Following a healthy 140,778 sq ft of take-up in the first quarter of 2014, activity in Leeds city centre has been more modest in the past three months, with take-up of 103,729 sq ft, according the latest research by property consultancy Knight Frank.
Elizabeth Ridler, partner specialising in office leasing at Knight Frank’s Leeds office, says: “While activity in the first quarter of this year as a whole was down 44% on the same period last year, the Leeds market was characterised by a number of major deals in 2013 which pushed take-up to a record annual total.”
“The dynamics of supply and demand now unquestionably support the case for speculative development. There is without doubt a window of opportunity to capitalise on the significant number of upcoming lease events and also on the number of occupiers who are increasingly demanding a better product and are willing to pay for it.”
She added: “With more cranes being visible in the city, we anticipate tenants to start ‘voting with their feet’ and show a strong preference for office accommodation located within short distance of the train station.
“Meanwhile, although rents have remained largely static, we anticipate the next phase of pre-lets to push headline rents upwards from £25.00 per sq ft to £26.00 per sq ft by the end of this year.”
Knight Frank research revealed that a total of 23 transactions had been completed between April and July this year, 17 per cent of which were lettings of over 10,000 sq ft and 26% were in lettings over 5,000 sq ft.
Notable deals included Sanef Operations at Hermes St John’s Centre (24,242 sq ft), which has resulted in the creation of 300 new jobs for the city; Ashcourt Rowan at Aegon’s City Point (11,146 sq ft); Sticky Eyes at 100 Wellington Street (11,800 sq ft); and Call Credit Information Group at One Park Lane (10,240 sq ft).
Ms Ridler said: “The occupier market was primarily driven by the finance and banking sector as well as retail and distribution firms, which in total accounted for more than 71 per cent activity in the first half of this year.
“A significant amount of pre-let activity took place during the second quarter of this year and we expect this trend to continue. PWC is reported to be close to signing a pre-let of approximately 50,000 sq ft at Roydhouse Properties’ Central Square scheme, which will provide a total of 220,000 sq ft prime offices.
“The availability of Grade A space edged up to 251,256 sq ft during Q2. This includes Evans’ recent comprehensive refurbishment of Minerva has now completed and offers circa 26,000 sq ft of Grade A office space at a rent of £24.50 per sq ft. Evans is also currently on site at Capitol House, and will undertake a refurbishment totalling c. 20,000 sq ft with completion expected this autumn.
“MEPC are also on site with their next phase at Wellington Place, extending to 104,000 sq ft. The Joint Venture of Kier and Bruntwood together with MEPC are reported to be in discussions with Addleshaws, who are looking to relocate from their HQ on Sovereign Street for 50,000 sq ft,” added Ms Ridler.
