Prime office supply in Leeds hits record low as overseas investors flock to city

OVERSEAS investors snapped up more than 50 per cent of prime office space on the market in Leeds in the first half of 2020 as supply hit a record low, according to a new study.

Leeds' real estate market remains in a very strong position, according to Savills.

The research from Savills found that prime office rents in Leeds grew by 6.7 per cent in the first half of the year, despite the pandemic, and now stand at £32 per sq ft.

The real estate firm said that despite the number of lettings in the city centre falling to 160,146 sq ft in the first six months of the year, 40 per cent below the 10-year first half average, the continued lack of Grade A office space in the market has led to rents rising.

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According to Savills, the vacancy rate is just 4 per cent, the lowest level since records began.

Paul Fairhurst, head of the office agency team in Savills Leeds, commented: “While Covid-19 has obviously suppressed how much office space has been let so far this year the city’s long-term prospects are very strong.

“Leeds was recently named the best place to start a business in the UK and the recent moves by Channel 4 and Sky have led to a spate of other tech, creative and digital companies following suit.

“We also have a strong health and science sector, which is only set to grow in the coming years, that will keep rents buoyant. The challenge though is to get more office space in the pipeline so these occupiers can find suitable space and don’t look elsewhere for alternatives.”

Simon Lister, director in Savills Leeds investment team, said: “Demand for Leeds office assets has mainly come from overseas investors so far this year, with them accounting for over 50% of office buys in H1. More buyers are circling, but there is not much on the market at the moment, as most vendors currently lack the motivation to sell, so this is maintaining Leeds prime office yields at 5%.”

Clare Bailey, director in Savills research team, added: “Overall, despite the extraordinary events of 2020, Leeds real estate market remains in a very strong position.”

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