Shortage of city centre office space scould push rents over £30 per sq ft

Carter Jonas’s Commercial Edge research suggests that the limited number of new office buildings being completed or refurbished this year could lead to further rental growth within existing stock.

The refurbishment of The Majestic, which will be 65,000 sq ft, is the only speculative building to be completed this year. “Channel 4 is an obvious contender with its 30-40,000 sq ft requirement,” the report said.

“With the continued shortage of quality supply, further rental growth is possible this year, and it will be interesting to see if The Majestic refurbishment manages to exceed the £30 psf mark,” it added.

Future expansion of the city centre office market is expected to be focused on the South Bank area of Leeds.

Although the Leeds out of town market has seen few large lettings, it fared well overall in 2018, with just under 400,000 sq ft let, accounting for 38 per cent of the city’s total.

The report also noted that until now there has not been any large-scale serviced office provision in Leeds. “However, one of the largest city centre lettings in Q4 was to a serviced office specialist, reflecting a wider trend across the UK as the sector continues to disrupt the traditional leasing model,” it said.

Elsewhere, it said that York city centre is highly constrained although the mixed-use York Central regeneration scheme, close to the city’s railway station, has the potential to add a large amount of commercial space.

Harrogate also has an acute shortage of space and rental levels have increased accordingly. Meanwhile, Wakefield has been relatively quiet over the last year, the report added.