Leeds Offices Step Up

Recent research by Avison Young showed a strong start to 2019 in Leeds city centre with 222,000 sq ft take-up in 39 deals, 56% above the 10 year average. TMT occupiers accounted for the lion’s share of activity, and with Channel 4’s announcement that it intends to acquire 25,000 sq ft at Rushbond’s Majestic this commitment is likely to act as a further stimulus for the continued growth of this sector in the Leeds region. Banking and finance combined with professional services also accounted for a third of transactions.

Take up was led by the 71,000 sq ft letting at M&G’s Central Square to Link Asset Services, a share registry provider. There were also five transactions above 10,000 sq ft, the largest of which was 20,700 sq ft to WYG plc at 3 Sovereign Square as well as Unite Union (12,800 sq ft) and Opera North (11,000 sq ft). There were two further 5,000 sq ft deals to engineering companies BAM Nuttall and Buro Happold. The Government Hub announced its move in 2017 and will open in the next 12 months. Metropolis has published details of 20 future relocations and 36 companies considering a move in recent months.

Out-of-town mover activity was more subdued but there was also a greater than average level of take-up for deals below 5,000 sq ft across both markets.

Channel 4’s deal to lease three floors of the 66,000 sq ft Majestic, the former cinema located opposite the train station will account for one office scheme. Along with 34 Boar Lane (46,000 sq ft) this is currently undergoing a major refurbishment in the city centre. The speculative 4 Wellington Place (155,000 sq ft) is also under construction in the city centre and due for completion by the end of 2020. The only new development completed recently was the newly refurbished 33 Wellington Street of which 15,000 sq ft is still available.

Metropolis is tracking around 40 companies looking for office space in the Leeds area.

Leeds Office Market Q1 2018

Take up of Leeds city centre office space has grown by 83 per cent in the opening months of 2018, according to the Leeds Office Agents’ Forum (LOAF).

Office leasing figures released by LOAF have revealed that 191,861 sq ft of office space was taken up by occupiers in the city centre in first quarter of 2018 as part of 28 office deals. This represents an 83 per cent increase on the same period last year and the strongest first quarter recorded for five years.

Of the 28 city centre transactions to complete, the largest was the 76,000 sq ft acquisition at 33 Wellington Street by Walker Morris and the letting to the Dart Group (Jets2) of the remaining 48,272 sq ft at The Mint was the only other city centre transaction above 10,000 sq ft. Both deals came after long searches. Out of town the largest deals were Balfour Beatty and Call Credit.

Leeds remains an attractive city for ‘northshoring’ attracting a number of companies looking to set up back office operations, whilst serviced office providers are becoming increasingly interested in opening new centres in Leeds.

There remain a healthy number of live requirements within the market. Metropolis is tracking up to 40 companies searching and a further 100 occupiers approaching decisions on upcoming lease expiries over the next two years


Patchy Leeds Demand

Demand for office space in Leeds for the first half of 2017 remains similar to the 12 months that preceded it, but trailed the five year average by 18 per cent, according to new research.

The CBRE Leeds office marketview report found that office take-up in the city was 237,165 sq ft in the first six months of 2017.

There were three lettings over 20,000 sq ft; a 46,058 sq ft letting to Burberry at 6 Queen Street, 25,968 sq ft to Willis Towers Watson at 5 Wellington Place and 22,441 sq ft to BW Legal at 1 Apex View.

The majority of take-up in the city was in the sub 5,000 sq ft size band.

Despite the lower level of enquiries in all size ranges, annual take-up is still likely to be a record for Leeds city centre if the pre-let of 350,000 – 380,000 sq ft at Wellington Place to the Government Property Unit goes ahead.

Looking to the second half of the year, demand is expected to be patchy for at least another quarter.

Metropolis has run nearly 40 new requirements for Leeds office space this year, however most searches are small.

3 Wellington Place (109,000 sq ft) is the only new development completing within the next 12 months. Refurbishments available this year, include ‘Platform’ (120,000 sq ft) and 7 Park Row (40,000 sq ft),
which will help the dwindling Grade A market.

Leeds Lettings Surge

A recent office market report on Leeds by Colliers International highlighted a surge of letting activity towards the end of 2015. Office take-up for the Q4 2015 reached 267,000 sq ft (just below the quarterly record) and the total of office deals for 2015 reached over 680,000 sq ft. Around 60% of 2015 was Grade A newly constructed or refurbished space.

The most high profile transactions in 2015, most of which were tipped in advance by Metropolis, included Sky’s 97,000 sq ft deal at Leeds Dock; Addleshaw Goddard pre-let 51,000 sq ft at 3 Sovereign Square and PWC preletting 50,000 sq ft at Central Square,. Legal and financial services accounted for 33% of take-up in 2015, followed by technology and media on 23%. Prime rents are around £27 psf and predicted to rise in 2016.

The Metropolis database reveals nearly 50 outstanding office requirements in Leeds including IPF, RSM and Jet2 with substantial requirements. In total, the fifty firms are currently searching for over 400,000 sq ft of office space in the city, with another 30 firms due to make decisions ahead of lease expiries in 2016 and 2017. Lease expiries are triggering 60% of current relocations.

The availability of grade A office space, newly constructed or refurbished, has fallen to a five year low at 5% and only 7.75 across all grades. More than 530,000 sq ft of new office space is due to be completed shortly including 6 Queen Street; Central Square; Sovereign Square and 6 Wellington Place. Manchester and Leeds have the two most active office construction markets in the UK outside London.

The five new build schemes in Leeds city centre are 30% pre-let with other pre-commitments in negotiation. A number of refurbishments are also underway such as 6 East Parade (45,000 sq ft) and Concordia Works (14,000 sq ft) . Looking ahead, Cadddick Developments has secured planning for a mixed use scheme at Quarry Hill, which will include 107,650 sq ft of offices and BAM have gained consent for another phase of Latitude.

New space for Leeds occupiers

A recent report by Colliers International on the Leeds office market over the last 6 months, reinforced research by Metropolis, showing rising office take-up driven by occupier pre-lets and expansions and a healthy pipeline of new office space on its way in the city centre.

After a solid first quarter with office take up of 150,000 sq ft mainly in small deals, came the announcement of Addleshaw Goddard, the law firm, signing a pre-let on 4,645 sq m (50,000 sq ft) of offices at Bruntwood and Kier’s 3 Sovereign Square.

Leeds office take up of 549,000 sq ft during 2014, was down on the 2013 total, but 10% above the 5 year average. Large recent deals include: KPMG taking 60,000 sq ft at Sovereign Street, a pre-let of 32,382 sq ft to Squire Patton Boggs at 6 Wellington Place; DAC Beachcroft taking 23,000 sq ft at Boultbee Brooks’ refurbishment of St Paul’s House; FDM goup taking 17,000 sq ft at Whitehall Riverside.

Professional Services (notably law firms) and healthcare occupiers were the most active in 2014, but the year also saw deals to Green Flag, BSkyB and TPP. There are about 400,000 sq ft of office requirements circulating in Leeds at the moment. Metropolis is tracking around 25 medium/large searches in the city including PWC, Walker Morris, Equifax and more space for BSkyB amongst others.

In terms of development, future Leeds office supply levels are set to be boosted with schemes on site at Central Square, Wellington Place, 3 Sovereign Square and 6 Queen Street which will deliver 450,000 sq ft of office space over the next two years. further new space is also potentially in the pipeline for 2017 could include: Latitude Blue (120,000 sq ft), 5 Wellington Place (70,000 sq ft), City Square House (175,000 sq ft) and the Yorkshire Post Site (200,000 sq ft).

There are a series of lease events over 2015-16 amongst the financial services and legal sector tenants in Leeds, which could trigger up to 300,000 sq ft of requirements. There are also over 80 lease expiries amongst smaller firms due to be resolved over 2015 and 2016.