Marked difference for regional office markets

YORKSHIRE’S two major office markets had contrasting fortunes in 2009, according to new research.

Lambert Smith Hampton said take-up dropped to 37% below the 10-year trend level in Leeds, standing at 632,122 sq ft, while Sheffield rose by some 9% of its 10-year annual average to reach 386,885 sq ft.

LSH’s National Office Report 2010 analyses 37 UK locations and captures two thirds of the UK’s office market stock.

While the office market in Leeds showed a marked improvement in the first quarter of 2010 after take-up reached 195,570 sq ft, Sheffield gave way to a poor start with activity of around 45,000 sq ft, down 42% on the same period last year, the research found.

Almost 45% of all take-up in Leeds was for Grade A space, however, only 11.3% of stock currently available on the market is of good quality. 

In Sheffield, the situation is less severe, with availability of 792,800 sq ft evenly distributed between Grade A and good quality second hand stock.

Prime rental values in Leeds have remained robust, continuing to grow over 2009 in both the city centre and out of town markets, while in Sheffield they continue to fall, with city centre and out of town rents down by 7% and 9.7% respectively.

Commenting on Leeds’ performance over the year Adam Varley, head of office agency at LSH Leeds, said: “Demand profile for both the city centre and out of town markets has been very similar over the past year, with SME’s propping up the market.

“This is illustrated by the take-up figure for quarter one 2010, whereby over 80% of the deals concluded were below 5,000 sq ft.”

Rob Darrington, head of office agency at LSH Sheffield, added: “Activity across Sheffield was largely driven by the public during 2009, with Sheffield Hallam University’s acquisition of Oneleven Arundel Gate and the Department for Children, Schools and Families pre let at 2 St Paul’s Place equating to almost one third of the total annual take-up.
 
“While the public sector remains a key source of demand, it is unclear as to where the next occupier from within this sector will come from, given the Government’s intention to radically rationalize its property holdings.”