Signs of improvement for regional office market
HEADLINE office rents in Leeds will rise to £25 sq ft by the end of this year while the Sheffield office market is enjoying its strongest take-up so far in 2011, according to new research.
Knight Frank’s latest Regional Office Market Presentation (ROMP) research has revealed that headline rents in the city have remained steady at £24 sq ft for the past 18 months, having fallen from £27 sq ft at the height of the property boom.
In Sheffield, ROMP found that the 105,175 sq ft take up in the third quarter of the year confirms the market predictions made by the Sheffield branch of the commercial property experts that the city’s 2011 figures would beat last year’s.
According to Knight Frank, the expected rise in rents in Leeds has been caused by the increased take-up of grade A office space in the city and the consequent decrease in the availability of quality office space.
The vacancy rate at the end of the third quarter of this year stood at of 10% in the city, down from 12% a year ago.
Knight Frank’s research reveals that office take-up in Leeds was a healthy 115,973 sq ft in the third quarter, and much improved on the 37,000 sq ft seen in the first quarter of the year.
Quarter three’s encouraging take-up figures are indicative of improving occupier confidence in the city.
Elizabeth Ridler, partner specialising in office agency in Leeds, said: “The occupational markets still remain tough but, with diminishing levels of grade A supply, we expect some occupiers to consider taking advantage of the deals on offer now in order not to miss out.
“This may trigger the pre-let market, but with funding still hard to secure, most developments will need to see around 30% to 50% pre-committed to prior to any start on site.”
Sheffield partner Tim Bottrill said: “We said in August we believed the Sheffield office market was firmly on course to exceed the level of take-up seen in 2010.
“With one quarter remaining, total take-up for 2011 has now reached 259,515 sq ft – already eclipsing the total for 2010 of approximately 250,000 sq ft.”
“Take-up for 2011 as a whole is also on course to finish marginally above the ten-year annual average – which is a very decent outcome considering all the talk of Sheffield’s relatively high exposure to the public sector and the cuts which have had a strong economic affect.”
Mr Bottrill added: “There is no sign as yet that speculative development will return to the city centre, although the issue will come under greater scrutiny in the next 12 to 24 months, as existing space diminishes further.”
