Signs of a steady revival in office market

The report compiled by King Sturge says that there is likely to be more than one million sq ft of new office requirements coming on stream between 2011 and 2016, which should provide a much-needed shot in the arm for pre-let development.

Richard Thornton, head of the King Sturge office agency team in Leeds, said a number of businesses were likely to consider office moves because they had "cut their cloth according to the economic climate".

He added: "In general, these are businesses of such quality that we would expect them to seek new premises, leading to a return of pre-let driven development, although, if some decide to select an existing building, they will

never get a better deal, and could achieve one which would cover their fit-out and dilapidations costs, representing a 'cost-neutral' move."

Speculative development of new-build offices remains on hold.

The report states that it is "highly unlikely" that any speculative office schemes will start on site in 2011.

King Sturge highlighted the fact that Ripley Capital has recently acquired 21, Queen Street, in Leeds, for Formal Investments. The continuing lag in the development cycle will result in a shortage of Grade A office space during the next two or three years, according to King Sturge.

Availability of Grade A office space in Leeds has fallen to about 600,000 sq ft.

Mr Thornton said: "Given that annual Grade A accommodation take-up is about 250,000 sq ft, this availability represents about two to three years supply, putting the city in a strong position for when the market recovers. A good underlying market and a continuing lack of speculative development will allow this space to be absorbed."