City office market set for the next phase of building

The study also found that the UK is suffering from a twin-speed office market, in which the regions are continuing to fall behind central London.

Jonathan Shires, the director of office agency at CBRE Leeds, said: “The Leeds development market has most recently been characterised by refurbishments of small office buildings within the city centre, although this follows a healthy boom period between 2005 and 2009 when 1.7m sq ft of space was completed in the city centre.

“The most recent of these refurbishment projects includes 100 Wellington Street (West One) where Bruntwood has undertaken a major refurbishment of the entire 33,000 sq ft. The refurbishment of 21 Queen Street is also in progress by Formal Investments, delivering 37,490 sq ft through the addition of two extra floors.”

He added; “Looking further ahead, two new builds which could form the start of the next development cycle, are situated at Criterion Place on Sovereign Street and No10 Wellington Place. An exclusivity contract is in place between KPMG and Leeds City Council at Sovereign Street, which will lead to the delivery of the first phase at this site, a 53,000 sq ft stand-alone building.

“There is a further 100,000 sq ft potential new build on the neighbouring site where the council is likely to announce a preferred developer and occupier partnership before Christmas.”

According to Mr Shires, No10 Wellington Place is believed to be partially under offer to a Leeds law firm.

He added: “However, both of these buildings will be fully let at the time of completion, adding no further supply to the falling Grade A stock.

“Further major refurbishments at City House (Bruntwood), Minerva House (Evans) and 1 Aire Street (Network Rail) are set to start in early 2013, providing an additional 185,000 sq ft of quality cooled offices.”

Elsewhere in the country, there are large schemes under construction at Two Snowhill in Birmingham, Atria in Edinburgh and One St Peter’s Square in Manchester.

The CBRE survey warned that there were many challenges facing developers who wanted to deliver big construction projects.

The report said: “At the top of this list are funding issues, with the availability of debt funding particularly restricted.

“The majority of schemes currently underway are being equity funded and are typically being developed within a joint venture arrangement.”