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Leeds

Leeds office leasing to stabilise in 2012 after rising close to five-year average

says Jones Lang LaSalle research


Leeds, 5th March 2012 – Take-up of office space in Leeds will remain constant in 2012 following a 5.2 per cent annual increase during the last 12 months, according to the latest research from national property consultants, Jones Lang LaSalle.

However, while Leeds office supply and vacancy rates are expected to fall this year (2012) space under construction will rise by 9.3 per cent, says the latest Jones Lang LaSalle UK Office Market Outlook Q4 2011.

Office letting volumes in the final quarter of 2011 were 85,000 sq ft, a 26.7 per cent fall on the previous quarter while supply stood at 1,447,000 sq ft, a 9.4 per cent rise on the previous three months.  Prime per sq ft rents remained at £26.00 with yields stable at 6.25 per cent. A total of 63,500 sq ft was under construction and due to complete in the next 18 months (2012).

Final quarter letting activity moved into line with average levels creating a 2011 take up of  398,000 sq ft, up 41 per cent on 2010 and just two per cent off  the five-year average. The main quarter four deals were the 10,994 sq ft Toronto Square acquisition by Towry and the acquisition of 10,325 sq ft at 2 Wellington Place by BSkyB.

Director in Jones Lang LaSalle's Leeds National Office Agency team, Richard Thornton, said: “While there has been some recovery in deal volumes this is still relatively weak with most transactions involving properties under 5,000 sq ft. There was still a clear preference for good-quality space and Grade A take-up accounted for 57 per cent of deals in 2011 with main activity driven by sectors including recruitment, financial and media. Looking ahead, we expect take-up to be driven by  lease renewals and further consolidation within the legal sector.
 
“With few new construction starts, some landlords are taking the opportunity to upgrade secondary assets and take advantage of occupiers’ continuing `flight to quality’. We believe that 2012 could see the return of some pre-letting activity which could kick-start some much-needed speculative space in the city centre.”

The report adds that while overall supply increased in the final quarter of 2011, Grade A availability remained stable, reflecting a 4.9 per cent vacancy rate.