Lack of space in city centre
Leeds could run out of available Grade A city centre office space by the end of 2020, according to new data.
Analysis by Fox Lloyd Jones (FLJ) has found that only 230,000 sq ft of Grade A stock, reflecting the best quality office accommodation, remains available in the city centre, with just 12,600 sq ft of this being new build space.
Given demand for office space continues to heavily outstrip supply, the Leeds-based commercial property consultant has warned that the scarcity of available stock coupled with a six-month pipeline under construction, leaves 2021 staring at a major supply gap.
Alongside the research FLJ is tracking 2m sq ft of leads and analysis has identified the need for more than 1m sq ft of supply to hit the market in the short term to meet the city’s economic and growth aspirations.
The second half of 2019 saw a number of moves completed or further details confirmed. This included news that Channel 4 would take over 25,000 sq ft of space on the third, fourth and fifth floors of Rushbond’s Majestic, and law firm Walker Morris moving to the 76,000 sq ft 33 Wellington St – 13,000 sq ft of which will now be sublet to Progeny.
Paul Fox, Director at FLJ, said that “Leeds needed to find new areas to deliver sizeable zones of flexible office space to ensure it can keep pace with other regional cities such as Birmingham and Manchester”.
“There is an acute supply gap of new and refurbished Grade A office buildings emerging between now and mid 2021 in Leeds. This is counterbalanced by high level of demands fuelled by high profile names choosing the city for new headquarters outside London such as Channel 4. To date, Leeds has remained relatively resilient to changing economic conditions and its strength across a wide range of sectors including financial and professional services and its growing digital sector ensures the city remains high on the possibilities list for major relocations.
“Approximately 200,000 sq ft of new build and refurbished space is currently under construction and still available. Based on historic Grade A take up it will all be snapped up during 2020.
“We foresee that given market dynamics that there is a very real prospect of high-quality office supply disappearing within the next 12 months which is a worry in context of the progress Leeds has made in recent years.
FLJ’s study suggest that given lease events arising over the next few years, in addition to new enquiries from outside the city, there is a growing requirement for developers to look ahead to 2022 and 2023 to ensure future growth is protected.
Mr Fox highlighted schemes such as CEG’s Temple District as being an emerging and important focal point and opportunity to create a “flow of buildings” to meet future demand.
Paul Richardson, Investment Manager at CEG, explained: “Construction of Globe Point will commence in Q1 2020. This is the first office building at the £350m Temple district. Comprising 38,000 sq ft, Globe Point will be the only announced speculative new building office completing in Leeds City Centre in 2021.”
Mr Richardson said that the scheme’s second building, Globe Square, which will offer a further 138,168 sq ft of office, retail and leisure space, has detailed planning permission and is available for pre-let.
He said: “We are fully supportive of Leeds City Council and applaud its work in attracting global brands such as Burberry and Channel 4 to the city.
“Pre-lets of speculatively built office accommodation are going to continue to be the main option for occupiers looking to the city for the next two to three years and there is a clear need for improved quality and supply of new buildings to help Leeds compete with other key regional cities.”
