Grade A office prices forecast to rise in 2015
A SHORTAGE of grade A office space in Leeds will push prices higher in 2015, according to commercial property agents Savills.
It is predicting strong demand will drive rents up by about £3 per sq ft, to £27-28, while yields could compress below 5.5% for the first time since 2007, with nothing larger than 37,000 sq ft currently available.
Paul Fairhurst, head of office agency at Savills Leeds, comments: “Although no prime office investments transacted in 2014, there were strong market indicators of hardening yields such as Lisbon House on Wellington Street which achieved 5.57%.
“As occupier demand continues to significantly outweigh supply, we are anticipating further downward pressure on yields next year.”
Savills also forecasts office uptake in Leeds will remain strong throughout 2015, topping the 10-year average of 517,000 sq ft for a third consecutive year. It predicts a higher figure than 2014’s anticipated level of 550,000-600,000 sq ft, although next year is not expected to trouble the record 794,000 sq ft of 2013.
Mr Fairhurst added: “Pre-lets will be the order of the day next year, with PwC and Addleshaw Goddard, Sky and Towergate expected to follow hot on the heels of Squire Patton Boggs and DAC Beachcroft’s recent decisions to take space.
“Occupiers will be attracted to the quality of design and enhanced specification due to be delivered by the speculative developments currently underway in the city.”
In late 2015, 180,000 sq ft of additional new space will be delivered at speculative schemes including 6 East Parade, 6 Wellington Place and 6 Queen Street, followed by a further 200,000 sq ft of available space at Central Square and Sovereign Square in 2016.
