Bond Court, Leeds
Three long-standing records were broken in 2017 as the Leeds office market enjoyed a strong year, according to property consultancy Knight Frank.
For the first time ever, office take-up in Leeds passed the one million sq ft mark - more than double the amount registered in 2016 and 88% higher than the 10-year annual average for the city.
At the same time, the Government Property Unit (GPU), on behalf of HMRC and the Cabinet Office,
NHS Digital will also relocate to this new office, with occupation scheduled for 2020.
As the city’s office market continues to flourish, rents have reached £30 per sq ft for the first time ever.
These three record-breaking statistics were revealed by Knight Frank in its Regional Cities Report, published this week.
Eamon Fox, partner and head of Knight Frank’s office agency department in Leeds, commented: “Whilst the GPU letting has attracted the majority of market attention, occupier activity was strong across all sectors.
“Significantly, three deals above 40,000 sq ft were completed during the year, a feature of the market that was absent from 2016.
“In a deal that will enable a move from Albion Place, Leeds Building Society took control of the 80,600 sq ft Sovereign House as the year was finishing.
“The building is the former home of Addleshaw Goddard who moved to Bruntwood’s 3 Sovereign Square in one of the largest deals in the city in 2016.
“Earlier in the year, Burberry took 46,000 sq ft at 6 Queen Street on a 10-year lease. The deal was of major significance to the Leeds market with £30 per sq ft being agreed.
“Prime rents in the city have now shifted upward on the back of this transaction, “said Mr Fox.
Underpinned by the GPU, the public sector accounted for the highest percentage of take-up in 2017, 39%.
It was a lack of available stock at the upper end of the market, rather than low investor appetite, which limited investment volumes in 2017.
Although the overall deal numbers were up when compared to 2016, investment volume only reached £127m, 25% below the 10-year average for the city.
Henrie Westlake, head of Knight Frank’s Leeds office and senior investment partner, said: “In contrast to the previous year, domestic money accounted for the majority of investment in 2017, 47%.
“Nonetheless, international interest remains strong, with overseas buyers accounting for 40% of investment volumes.
“Prime city core yields remained unchanged at 5.25% in 2017. At this level, prime yields are 50 basis points above the market peak of 4.75% recorded in 2007.
“Given the strong interest and limited availability of prime opportunities, however, should the best buildings come to market, a sharper yield would be expected.
“For secondary assets, refurbishment opportunities remained highly sought in order to re-institutionalise assets and thus make a profit.”
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