Recovery hope as city sees more offices being filled up

THE Leeds office market is starting to recover from the worst economic slump in generations, according to a new survey.

A study by Colliers International suggests that prospects are looking brighter for the Grade A office market, although it has a long way to go before it hits the heights achieved during the property boom.

Colliers’ latest Net Stock Absorption (NSA) study shows that total absorption (physical occupation) of offices in central Leeds increased by 120,633 sq ft in the first half of 2012, which is a 47 per cent increase on the previous six months.

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Roddy Morrison, head of offices at Colliers International Leeds office, said: “The first quarter for 2012 was very good, although transaction levels dropped off during the second quarter, which was disappointing. This was, however, largely due to a number of transactions still being under negotiation at the time, to include GDF Suez (30,000 sq ft), and Yorkshire Post Newspapers (35,000 sq ft) at No 1 Leeds. These, together with other deals currently under negotiation, the shortage of new stock coming to market, and pre-letting deals such as KPMG (60,000 sq ft) are likely to deliver an improved annual result for 2012 and into 2013.”

Grade A units made up 32 per cent of take-up in the first half of 2012, while the Grade B market was dominated by the sale of 2-3 Victoria Place in LS11 (63,552 sq ft) to the Medical Protection Society.

Mr Morrison said: “Grade B occupancy levels increased by 89,452 sq ft, which is the highest half yearly increase for more than five years. We are starting to see signs of more refurbished stock availability.

“Occupiers will welcome more choice in the refurbished, Grade B, market as more stock becomes available over the next two to three years as occupiers, having signed pre-commitments, vacate existing buildings. Many of these are ripe for refurbishment.”

Grade C take-up was modest with just 10 deals totalling 12,191 sq ft compared with 23,253 sq ft in the second half of 2011. Total availability of office stock within central Leeds has fallen from 1.85 million sq ft in December 2010 to 1.49 million sq ft, a drop of around 20 per cent. The reduction of Grade A space is even more pronounced. It fell by 32 per cent in the same period to a four-year low.