Leeds offices set for record breaking year

13 June 2017

Office take-up in Leeds is on track to reach 800,000 sq ft (74,320 sq m) by the end of 2017, 94% above the 2016 total and the busiest year on record, says Savills. 

The firm reports that office lettings in the city totalled 415,000 sq ft (38,553 sq m) in 2016, down 25% on the long-term average. However, based Q1 17 take up, and with several organisations hunting for new space, Savills anticipates that full year levels will rebound to exceed the long-term average of 550,000 sq ft (51,095 sq m) by 45%.  HMRC and the NHS are currently understood to be under offer for in excess of 350,000 sq ft (32,515 sq m) in the West End area of Leeds.

Savills highlights the thriving tech sector in Leeds as a key area for continued growth: tech jobs have increased by 2.8% in the city over the past five years, and are forecast to grow by a further 5.6% in the next five*.  Examples include Google’s creation of The Digital Garage at Leeds Dock, which helps start-ups develop digital skills.  Additionally, Sky has increased its presence in Leeds from circa 40 to 650 employees over the last 18 months, and plans to expand further with another 25,000 sq ft (2,323 sq m) of office space.   

The growing popularity of the city has led to a marked decline in the amount of Grade A space available, reports Savills.  With only 130,000 sq ft (12,077 sq m) set to be in the market by the end of H1, and average Grade A take-up of 256,000 sq ft (23,782 sq m), Leeds will have  just a six month supply of such space available.  As a consequence, Savills says prime headline rents have risen from £27.50 per sq ft (£296 per sq m) in 2016 to £30 per sq ft (£323 per sq m) now.  Leeds has also seen rents for top refurbished office space rise 23% over the last five years, from £22 per sq ft (£236 per sq m) in 2012 to £27 per sq ft (£290 per sq m) in 2017.

Paul Fairhurst, head of Savills Leeds, comments: “Leeds is set to have a great year, as the investment in delivering good quality office space and improving the fabric of the city has resulted in high profile and exciting companies vying for space.  The city centre continues to expand south and west, as a number of mixed-use schemes are being brought forward.”

Clare Bailey, associate director in the commercial research team at Savills, adds: “Leeds is an increasingly desirable location and there is a growing need for more city centre office development to keep pace with demand.  The differential between top Grade A office rents in Leeds and the City of London is the largest on record and may well lead to even more occupiers following the lead of companies such as Burberry by relocating their back office functions to the city.”

*Source: Invest In Leeds


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