Office news - Leeds 24th December 2015

The Leeds office market is on track for a record year with total take up expected to reach 660,000 sq ft by the end of 2015, reports Savills. This would put the full year total 26% above the five year average of 520,000 sq ft (48,309 sq m), and 21% above last year’s 545,000sq ft (50,630sq m) total .

The firm highlights Allied London’s 97,000 sq ft (8,361 sq m) letting to Sky at New Dock, Addleshaw Goddard’s acquisition of 51,531 sq ft (4,787 sq m) at Sovereign Square and PwC’s acquisition of 49,650 sq ft (4,612 sq m) at Central Square (pictured) as among the most significant deals in the city in 2015. Savills said while supply of Grade A space has been extremely restrained throughout this year and just 93,000 sq ft (8,640 sq m) is available, this will change dramatically in 2016 when a number of new office developments are completed. More than 400,000 sq ft (37,160 sq m) of additional Grade A space will enter the market including: 6 East Parade (from Bridges Ventures and Evenacre); Central Square (from M&G and Marico); Sovereign Square (from Kier and Bruntwood) and Wellington Place (from the Canadian Pension Fund and MEPC).

Paul Fairhurst, head of office agency at Savills Leeds, said: "The confidence shown in the sheer volume of speculative office development underway in Leeds is already paying dividends with a number of significant pre-lets completed and more due to be announced in early 2016. Timing is key and the speed at which Allied London secured Sky for its waterside scheme at New Dock is testament to this.” With the supply of new stock so constrained in the traditional core, rents for prime refurbished office space have risen from £20-£21 per sq ft (£215-£226 per sq m) in 2013 to circa £24-£26 per sq ft (£258-£280 per sq m).

 Savills states that, as a result of this, refurbished rents and pre-let rents for new buildings in Leeds have been at a similar level throughout 2015. Paul Fairhurst added: “Competition for the best quality refurbished stock has significantly narrowed the gap with new build rents but we believe this will change in 2016 as the new Grade A space becomes available. For schemes reaching practical completion in the latter half of next year, rents are likely to come in at circa £27-£28 per sq ft. "Additionally, we expect to feel the ‘north-shoring’ effect more strongly in 2016 as companies look to capitalise on the relatively low property costs and quality of life which Leeds can still offer in comparison to London and other big cities.”