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Leeds occupier activity raises confidence in office markets

The return of some pre-letting activity in Leeds has helped to raise optimism in the regional office market according to property consultants Jones Lang LaSalle’s latest research.

Signs of recovery across the UK’s ‘Big Six’ regional office markets (Birmingham, Bristol, Leeds, Manchester, Edinburgh and Glasgow) continued during the first quarter of 2013 (Q1 2013), with total occupier take-up reaching one million sq ft, an increase of 25% compared with the same period last year.

Whilst regional variations continued to create a mixed occupier picture, total office take-up in the first quarter was 15% ahead of the three-year quarterly average level of 880,000 sq ft, boosted by strong activity in Manchester and pre-let activity in Leeds.

Jeff Pearey, head of Jones Lang LaSalle’s Leeds office, said: “The return of pre-letting activity in Leeds, with the commitments of KPMG at Sovereign Square and Shulmans LLP at Wellington Place will kick start much needed development in the city and be a stimulus to the wider market.

“Elsewhere, across the UK’s major regional markets city centre pre-lets are expected to remain relatively rare although dwindling supply levels will be a factor in most locations.

“Our advice to occupiers would be to plan ahead and well in advance of lease expiries or breaks as limited choice will remain for the foreseeable future.”

According to Jones Lang LaSalle’s data, the top five occupier requirements across the Big Six markets account for 1.8 million sq ft of office demand, with an average size of 60,000 sq ft.

Office availability across the UK fell by 4% in Q1 2013, with vacancy rates across the six regional markets monitored falling from 12.7% at the beginning of 2012 to just 12.2% in Q1 2013.

Whilst overall supply is gradually being absorbed vacancy rates remain stubbornly high in a number of locations.

On aggregate, vacancy rates are still some way above the 10-year average of 10.7%.

In contrast, Grade A supply remains relatively constrained across the Big Six; the average Grade A vacancy rate stood at just 3.1% at the end of Q1 2013.

In Leeds, of the 133,000 sq ft of space currently under construction in the city centre, just 38,000 sq ft remains available and is scheduled to complete in 2013. Overall availability continued to decline, with vacancy rates falling to just 10%.

The Grade A vacancy rate also fell from 4.5% in Q1 2012 to just 4.0% at the end of the first quarter.

This was posted in Bdaily's Members' News section by Mark Lane .