Yorkshire office market ‘bucking national trend’

OFFICE market conditions within the UK have remained healthy over the first half of the year with regional cities yet to see a reduction in occupier demand, according to new research.

Jones Lang LaSalle’s latest UK Office Barometer Research report claims that some cities, including Leeds, look better placed than others, including London, to weather the ongoing economic downturn.

Jeff Pearey, head of Jones Lang LaSalle’s Leeds Office, said: “Leeds, like Glasgow, demonstrated a good spread of core sectors taking office space last year. Our research shows office occupier demand in the Leeds city centre is well divided across four principal sectors: banking and finance, professional services, government and public sector, and service industries.

“Not one of these four core sectors is now substantially more dominant in the Leeds office market; the professional and legal sector comprises between 20% to 25% of office take-up, banking and finance, government and public sector, and service industries are all at very similar levels. 

“With the slowdown in the economy, demand from some sectors will suffer more than others, so the city’s ability to attract a wide range of occupiers will be beneficial and will help ensure it remains well placed for market growth in 2008.

“Compared to the City of London office market, where the dominant reliance on the banking and finance sector has led to a slow down in tenant demand and general market activity, Leeds has a better foundation for ongoing market growth. Its ability to attract a balanced range of occupiers’ arguably places it at an advantage, especially as a number of core sectors and subsectors are expected to grow and change over the medium term.”

Mr Pearey said the main risk to the UK office market was a longer and sharper downturn in the economy than anticipated which will weaken employment in the medium term, especially within the financial sector. 

“It is expected that occupiers will become more cautious and there will be a tail off in tenant demand,” he said. “However Leeds, as demonstrated by the even spread of sectors acquiring office space last year, is less exposed to the roller coaster effect that could be more prevalent in some of the other regional cities and in the South East as a whole.

“In Leeds, with the lack of prime supply recently restricting take-up, most new office developments will attract larger requirements as they complete. The pipeline in Leeds looks strong and economic conditions, which may delay further proposed schemes, will guard against any future oversupply.”

Jones Lang LaSalle’s Office Barometer: UK & Ireland analyses office occupier markets for the major UK and Irish office markets including Birmingham, Leeds, Manchester, Western Corridor, Edinburgh, Glasgow and Dublin.