Office rents set to reach record high of £28 per sq ft

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HEADLINE office rents in Leeds could reach an all-time high of £28 per sq ft, according to research from property consultancy Knight Frank.

Knight Frank’s latest Regional Office Market Presentation Report (ROMP) reveals that rising demand is helping to push rents higher, as more new and refurbished office accommodation comes on the market.

Work on a large number of planned schemes came to a halt in late 2008, when the global financial crisis wrecked confidence. But the office market is finally enjoying a revival.

Eamon Fox, a partner and head of office agency with Knight Frank in Leeds, said: “Leeds is buoyant. A classic example of this buoyancy is NFU’s No 1 Whitehall Riverside, a refurbished office building, which has seen two significant deals at £26 per sq ft in the past six months.

“Handelsbanken, who have taken 8,117 sq ft and the FDM Group (17,159 sq ft) have moved to No 1 Whitehall Riverside. These serious rents underline its attraction.

“We are seeing the prospect of similar rents being achieved elsewhere in the city, of refurbished accommodation and new-build product. We are now moving in the direction of £28.00 per sq ft.

He added: “Meanwhile, the good news for Leeds continues. Investor appetite for regional office stock is strengthening. Not surprisingly, given the substantial weight of money targeting regional offices, the office yield, which is the annual return on an investment expressed as a percentage of capital, is a healthy 5.25 per cent.

“Nationally, given current named requirements of 4.58m sq ft, which is the highest in five years, we expect to see higher levels of occupational demand above the five-year average.”

In a further sign of the market’s revival, Knight Frank recently advised on the letting of a 3,846 sq ft office to recruitment consultants Charlton Morris at the Grade II-listed Park Row House in central Leeds. Charlton Morris, who are opening a new office in Leeds, are taking a 10-year lease.