Leeds retains competitive edge in UK office market

Incentives begin to harden according to Jones Lang LaSalle’s latest research

Article posted: 19 Jul 2011

Jones Lang LaSalle’s latest research into office space in the UK shows achievable office rents have stabilised in over half of the property markets analysed including Leeds where levels have remained unchanged since March 2010.

Offices rents have increased across more markets with 26% of centres monitored across the country showing a year-on-year rise since March 2010 compared with just 8% of markets in 2010. Jones Lang LaSalle anticipates an average of 0.7% rental growth in headline rents in 2011for office space in Leeds, Birmingham, Manchester, Edinburgh and Glasgow, however this is likely to be driven by the gradual erosion of Grade A space, rather than a significant bounce-back in occupier demand.

Jeff Pearey, Head of Jones Lang LaSalle’s Leeds office, said: “Leeds retains its competitive edge nationally with a good range of Grade A stock still on offer and rents that compare favourably with the likes of Manchester, Glasgow and Edinburgh. Enquiry levels for office space have improved over the first half of 2011 and we anticipate stronger market activity this year in comparison to 2010, this bodes well for anyone contemplating launching an office refurbishment or indeed planning ahead for more substantial developments in the city.”

Jones Lang LaSalle’s 2011 survey shows that  landlord’s incentives have stabilised in around 35% of the markets monitored and in a number of locations have begun to harden, with average rent free periods for office space in Edinburgh, Newcastle, Bristol and Cambridge, amongst others falling. Despite this, substantial cost savings can still be obtained by occupiers in many regional centres. Year-on-year incentives are currently the most generous for office space in Hull, Doncaster and Middlesbrough.

Jeff Pearey added: “There are still significant opportunities for occupiers to obtain cost savings in some parts of the UK. However, the lack of speculative office development, which we are seeing across an increasing number of cities, means that the pipeline will remain severely limited and as Grade A supply reduces further, the window of opportunity for tenants is expected to close. This is becoming increasingly relevant in Leeds where we have seen transactions now in all of the key Grade A buildings with limited new supply other than refurbishments of existing stock.”

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Posted by Julie