Finance firms drive market amid calls for new office buildings

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Demand for new office space within the finance sector is driving the office occupier market in Leeds amid calls for speculative development to start “in earnest”.

Deals in the finance and banking sector as well as retail and distribution firms accounted for more than 71 per cent of activity in the first half of this year, according to property agent Knight Frank.

Take-up of city centre office space in the second quarter of 2014 was 103,729 sq ft, according to the firm’s figures, slightly down on 140,778 sq ft taken up in the first quarter.

Elizabeth Ridler, partner specialising in office leasing at Knight Frank’s Leeds office, believes the time has now come to increase speculative office development in the city.

She said: “The dynamics of supply and demand now unquestionably support the case for speculative development.

“There is without doubt a window of opportunity to capitalise on the significant number of upcoming lease events and also on the number of occupiers who are increasingly demanding a better product and are willing to pay for it.”

She added: “With more cranes being visible in the city, we anticipate tenants to start ‘voting with their feet’ and show a strong preference for office accommodation located within short distance of the train station.

“Meanwhile, although rents have remained largely static, we anticipate the next phase of pre-lets to push headline rents upwards from £25 per sq ft to £26 per sq ft by the end of this year.”

A total of 23 transactions were completed between April and July this year, 17 per cent of which were lettings of over 10,000 sq ft and 26 per cent were in lettings over 5,000 sq ft.

Notable deals included Sanef Operations, which took 24,242 sq ft at Hermes St John’s Centre, and Ashcourt Rowan, with 11,146 sq ft at Aegon’s City Point.

Ms Ridler said: “A significant amount of pre-let activity took place during the second quarter of this year and we expect this trend to continue.”

She added: “PWC is reported to be close to signing a pre-let of approximately 50,000 sq ft at Roydhouse Properties’ Central Square scheme.”