Occupiers flock for office space
NINE tenths of office deals completed in Leeds in the first half of 2008 were in the sub-15,000 sq ft category, according to new research.
Savills, which compiled the Leeds office market bulletin, said the findings reflected the high level of local occupiers taking space.
The research said the city had a strong half year with take-up currently standing at 252,262 sq ft, 5% up on the half year average over the last five years of 239,821 ft. However, this was 6% down on the same period in 2007.
With a further 250,000 sq ft of active enquiries for office space in Leeds this year, the report predicts that the take-up figures for 2008 will equal or even exceed the five year average take-up of 576,023 s ft.
Paul Fairhurst, director and head of Savills’ Leeds office, said: “The first half of 2008 has seen healthy demand, particularly from local occupiers such as Stewarts Solicitors, Jacobs Engineering and Skipton Building Society who have dominated the city centre market so far. This inevitably represents a hugely positive trend for the city.
“In addition, we have witnessed an increase in space taken by the professional sector which accounted for 42% of space taken. A prime example is at Bridgewater Place where we have advised solicitors DWF in the acquisition of the last 32,000 sq ft unit, which followed a previous letting to Ernst & Young.”
The report also analysed a survey carried out by YouGov on behalf of Savills, which looked at workers’ preferences. The study showed that location, public transport connections and proximity to amenities all featured in the top 10 important factors for staff.
In Leeds, the historical popularity of the office market in the city centre underlines the preference shown to this area rather than out of town sites where these key factors have been limited, Savills said.
However, the report also notes that following the success of the Round Foundry, City Walk, Lateral and Bridgwater Place, which are located out of the traditional city core, fringe locations in Leeds now incorporate a greater range of retail, leisure and transport facilities.
The ‘Dark Arches’, owned by Network Rail and developed through a partnership between Leeds City Council and Yorkshire forward, was seen as a prime example. The £4.6m redevelopment scheme will form the main gateway into the city centre from the south and incorporate a wealth of new retail and leisure facilities.
Once complete in December 2008, it will act as a link between emerging new out of town developments such as the established Holbeck Urban Village and Leeds’ traditional core.
With regards to rents, the research stated that top rent in Leeds for the first half of 2008 was £27 per sq ft, which was achieved on a 4,510 sq ft deal at Bridgewater Place to Operon and 3,300 sq ft at Whitehall Riverside to Henderson. This was an 8% increase on the headline rent of £25 per sq ft set in the fourth quarter of 2007, the report found.
Mr Fairhurst added: “With the high quality office space expected to come out of the Leeds market over the next few years, rents are likely to push £28 per sq ft on pre-lets within the sub-10,000 sq ft bracket.”
The report also said that due to a number of development completions, supply increased in the second quarter of the year and now stands at 1.3m sq ft. This equates to a vacancy rate of 9.7%, up from 6.8% at the end of 2007.
Clare Burke, of Savills research, said: “As development completions begin to filter through over the next six to 12 months, we do expect the vacancy rate in Leeds to rise further. However, we anticipate the impact of this supply to be reduced by existing and anticipated pre-lets on the larger schemes.”
