Headline office rents in Leeds edging to £25 per sq ft

Headline office rents in Leeds are expected to rise to £25 per sq ft by the end of this year, according to Knight Frank’s latest Regional Office Market Presentation (ROMP) research.

Headline rents in Leeds have remained steady at £24 per sq ft for the past two years, having fallen from £27 per sq ft at the height of the market.

Activity slowed in the second quarter of this year, with take-up amounting to 56,440 sq ft, which was 63 per cent lower than the level recorded in the first three months of the year. However, total take-up for the first half of 2012 was better than the corresponding period in 2011 and is up significantly on the same period in 2009.

The office vacancy rate in Leeds remained at around 10 per cent - its level since the third quarter of last year – but the good news is that available space continues to fall, declining by 25,000 sq ft to 325,000 sq ft.

Ed Harrowsmith, who specialises in office agency with Knight Frank in Leeds, commented: “A total of 19 leasing transactions were completed between April and June this year. The largest deal was the leasing of 15,824 sq ft at Albion Court by Bracken at £13.25 per sq ft on a 10-year lease. This is the only transaction which was in excess of 6,000 sq ft.

“Active demand increased slightly in the second quarter of the year and stands at a robust 420,000 sq ft. A solid level of named enquiries continues, including CapGemini (15,000 sq ft), GDF (40,000 sq ft) and DAC Beachcroft (35,000-40,000 sq ft).

"While market conditions generally remain tough, occupier sentiment is at least showing some tentative signs of improvement. Looking ahead, there is no speculative development and availability is therefore expected to continue to fall, which should lead to a hardening of incentives in the short-to-medium term”.

Mr Harrowsmith added: “Demand is likely to be concentrated among SMEs, with transactions focused on the sub-10,000 sq ft bracket, much as it was in 2011. We expect to see a number of pre-lets to be agreed by the end of the year”.

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