Leeds office investment on the up

BNP Paribas Real Estate reports on Yorkshire office market

Article posted: 13 Dec 2011

As 2011 draws to a close the annual take-up of office space in Leeds is expected to be on a par with last year’s level of 540,800 sq ft, but fall short of the five-year average of 760,000 sq ft pa, according to the latest report on the Yorkshire Office Market by BNP Paribas real Estate.

The annual take up of office space in Sheffield is expected to hit the five-year average of 300,000 sq ft pa and as Sheffield grade A supply tightens over the coming year, there is potential for net effective rents to begin to rise as incentive levels start to rein in. With an oversupply of secondary space in both markets, occupiers will continue to benefit from favourable landlord deals due to the fierce competition to let space, but unless a pre-let is secured, both markets are unlikely to see any speculative schemes go onsite for the foreseeable future.

Whilst the Leeds investment market will end the year on a high, with total 2011 office investment already surpassing the 2010 level; by contrast, Sheffield’s investment volume will be markedly down on last year’s level. How each market performs in 2012, will not only depend on market liquidity, but will also be determined by the type of offices that come onto the market. If prime assets remain scarce, inevitably transactional volume will be down.

Investment in Leeds offices totalled £240 million to the end of Q3, up 34% on the £179m transacted in the equivalent period a year earlier. This year’s transactional volume was boosted by Orion Capital Managers £130m purchase of the White Rose Office Park and Moorfield Group’s £46m purchase of West Riding House (pictured).

In contrast, following an exceptional year in 2010, investment in Sheffield offices is markedly down. Up until the end of Q3 2010 £76m had been transacted in eight separate deals. This year there have been only two reported deals: Ace Liberty & Stone’s £6.5m purchase of Telephone House and South Yorkshire Police’s purchase of Carbrook House for its new HQ. This downward trend reflects the lack of suitable investor product in the Sheffield market this year.

A full copy of the report is available to download at: http://www.realestate.bnpparibas.co.uk/pages/etudes_sectorielles/resultrecherche.php?alias=uk_etude_sectoriel_Offices&p=gb&l=en&r=534&t=defaut&ctx=1&s_wbg_menu=598&l=en&r=534&t=bnppre&ctx=0&s_wbg_menu=598&titre=1

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Posted by Sam