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News Release


Speculative development returns to Leeds office market

according to latest Jones Lang LaSalle research

Leeds, 8 November 2011 – Speculative development returned to the Leeds office market in the third quarter (Q3) of 2011, according to latest research by Jones Lang LaSalle.

Two Leeds office schemes got underway after a sustained period of subdued office development activity, says the latest On Point UK National Voice Q3 Office research report from Jones Lang LaSalle.

Development work started at 2, Bond Court, Leeds, which is set to deliver 15,000 sq ft of office space speculatively in 2012. Meanwhile, the signing of a pre-let to Clarion in the second quarter allowed speculative development to start at Elizabeth House which will provide around 10,000 sq ft to let.

Richard Thornton, director in Jones Lang LaSalle’s National Office Agency team in Leeds, said: "Office supply fell slightly in Q3 but remains inflated, standing 6.1 per cent above the level achieved at the end of 2010. Although overall vacancy rates currently stand at 10.6 per cent, the availability of Grade A space fell much faster, from 5.6 per cent to 4.9 per cent at the end of Q3.”

The report says that prime rents stabilised at £26.00 per sq ft in Q3. Incentives remained stable with around 30 months rent-free achievable on a ten-year term.

Richard Thornton added: “We could see some hardening of incentives as the availability of Grade A office space in the prime core starts to tighten but this also depends on the level of demand.”

Prime yields moved out by 25 basis points during Q3 from 6 per cent to 6.25 per cent. There were three office investment transactions totalling £33.9m compared with none in the previous quarter.
Q3 take-up for Leeds city centre was 116,000 sq ft with the out-of-town market totalling 63,000 sq ft, creating a total city centre take-up of 323,000 sq ft and 170,000 sq ft in the out-of-town market after three quarters of 2011.

Richard Thornton concluded: “In line with previous quarters, the service industries continued to dominate, in particular media, recruitment, professional and training companies.”