Eurozone shadow over the property market

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THE crisis in the eurozone has cast a long shadow over the UK’s regional commercial property market.

A new survey by GVA suggests that a lack of business confidence, and a shortage of Grade A office space, is having a negative impact on the British regional market.

The GVA’s Big Nine report takes a long, hard look at the health of the property market across the UK. The report comes to the sombre conclusion that regional city centre take-up levels are 12 per cent below the quarterly average.

Take-up in the Leeds marketplace reached 56,440 sq ft, which is significantly below the typical levels for the second quarter, although there has been an increase in demand for larger spaces.

Leeds has historically recorded a quarterly average of 91,066 sq ft. This below average trend was also found across the markets in Birmingham, Cardiff, Liverpool and Manchester. In contrast, take-up was just above or similar to average in Bristol, Glasgow and Newcastle, while Edinburgh recorded twice its average take-up.

According to GVA, city centre take-up may be disappointing in Leeds, but those working outside the city are finding reasons to be cheerful. The out-of-town market recorded a six per cent rise on the quarterly average in the nine GVA regional office centres. The out-of-town take-up was greater in Leeds in the second quarter than in any of the other regional office centres.

Matthew Tootell, GVA’s director of national markets, office, said: “A lack of business confidence, a shortage of Grade A office space and little pressure on occupiers to commit continues to put downward pressure on take-up levels in the city centre market.

“Although we envisage an improvement in the third and fourth quarter, with instructions for larger properties seeing signs of improvement in Leeds, concerns remain over how the eurozone crisis will play out over the coming months.

“Leeds may have outperformed the out-of-town average, but such buoyancy cannot be expected to be maintained.

“The 50,000 sq ft letting to Leeds City College at The Printworks was the largest out-of-town office deal of all the big nine regional cities and major deals like it are infrequent in the current economic climate.”

While London is booming, concerns have been expressed by many analysts that the regional market could be left behind.

In May, Alex Munro, a Leeds-based partner at Knight Frank, stressed that the London market was very different from the rest of Britain.

He said at the time: “Our central London team sold to people from 63 nations last year. London is a top five global city.

“That doesn’t mean to say that the rest of the UK is a basket case. Leeds is a shining beacon in the retail market.”