A speculative return to office market

Two Leeds office refurbishment schemes got underway after a sustained period of subdued office development activity, according to the latest On Point UK Voice National Office Report by property consultancy Jones Lang LaSalle. Development work started at 2 Bond Court, Leeds, which is set to deliver 15,000 sq ft of office space speculatively in 2012.

Meanwhile, the signing of a pre-let to Clarion in the second quarter allowed development to start at Elizabeth House which will provide around 10,000 sq ft to let once work is completed next month.

Richard Thornton, a director in Jones Lang LaSalle’s national office agency team, said: “Office supply fell slightly in Q3 but remains inflated, standing 6.1 per cent above the level achieved at the end of 2010.

“Although overall vacancy rates currently stand at 10.6 per cent, the availability of Grade A space fell much faster, from 5.6 per cent to 4.9 per cent at the end of Q3.”

The report said top rents stabilised at £26 per sq ft in Q3. Incentives remained stable with around 30 months rent-free achievable on a 10-year term.

Prime yields moved out by 25 basis points during Q3 from 6 per cent to 6.25 per cent. There were three office investment transactions totalling £33.9m compared with none in the previous quarter.