With high demand from tenants continuing to place upward pressure on rents, a growing number of national and international investors are now targeting the office market in Leeds, according to Knight Frank.
The property consultancy forecasts that office rents in prime areas of the city could rise from around £27.50 per sq ft today to an all-time high of £30 per sq ft by the end of year, as the local economy continues to go from strength to strength.
Economically vibrant and at the heart of the Northern Powerhouse, Leeds is a magnet for bright young people looking for work, to study, shop and sample a pretty cool nightlife, and many existing landlords are now waking up to the potential offered by this flourishing region by taking the opportunity to increase rents by refurbishing office space.
Eamon Fox, head of office agency at Knight Frank in Leeds, said: “£27.50 sq ft is currently the established norm [for rents in the city centre], but I anticipate rents in new builds such as 6 Queen Street, Wellington Place, 3 Sovereign Square and Central Square will hit £28 sq ft in the very near future.
“And rents won’t stop there. I see them moving forward to £30 sq ft as occupiers compete for the best space in these buildings, as well as in Bruntwood’s Platform by Leeds Station. These are exciting times for the Leeds office market.”
According to Knight Frank, professional services accounted for 28% of the take-up last year, while the Technology, Media and Telecoms sector accounted for 25% as Leeds proved popular with digital occupiers.
Fox added: “Grade A availability currently sits at about 441,000 sq ft, which includes 280,000 sq ft of brand new Grade A accommodation delivered during the second half of last year at 3 Sovereign Square, Central Square, 5 Wellington Place and 6 Queen Street.
“New supply in 2017 will comprise 271,000 sq ft, made up of 120,000 sq ft, 40,000 sq ft, and 120,000 sq. ft at 3 Wellington Place, 6 Park Row and Platform respectively.”