BNP Paribas Real Estate recently reported that the headline rental cost per square foot in Leeds fell from £27 in 2010 to £25 at the end of September this year as the economic backdrop became increasingly uncertain.
Take-up rates on offices in Leeds declined during the period, with deals done on 540,800 sqft of space in the first three quarters of 2011. This compares quite unfavourably with the five-year average but represents an upturn compared with 2010.
In general, the market for leasing office space in Leeds has been slowing in recent quarters as investment in speculative developments has effectively dried up, according to BNP Paribas, whose research reveals a similar story in nearby Sheffield.
“One issue Leeds has is that available grade A space is in less favourable city centre locations, away from the core office market and, with no speculative developments on the horizon and with occupiers not under pressure to move from existing space, this slows down the leasing market,” explained Richard Dunhill from the property advisor’s Leeds office.
While new office buildings are not generally being constructed in Leeds or Sheffield at present, falling rents present opportunities for employers looking for a better deal on their leasehold offices in either city.
During the first three quarters of 2010, property spending in Leeds focused squarely on the city’s prime and best-located offices, according to BNP Paribas’ local office. During this time, the market attracted roughly £240 million worth of investment.
Earlier this month, the same real estate firm reported that strong demand in recent quarters has seen a significant squeeze on Grade A office space supplies in central Newcastle. “Occupiers looking for a competitive deal on city centre space should act now as we expect their window of opportunity to close shortly,” said Aidan Baker from the company’s Newcastle office.
Editor’s notes: In 2022, the take-up of office space in Leeds through leasing deals was 618,200 square feet, which was just below the 10-year average of 645,500 square feet.
In 2023, the total take-up was 651,461 square feet, which is the highest annual total since 2019 and with an average deal size of 5,195 square feet.
In 2022, prime office rent in Leeds reached £36.00 per square foot.
In 2023, a new headline rent was reached at £37 per square foot. It was forecast by Leeds office agents that headline rents would grow further to reach £40 per sq ft by the end of 2024 and that headline office rents would reach a high of £44 per square foot per annum by 2028.