Take-up increases but trend towards smaller office space deals continues

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Take-UP of office space in Leeds city centre rose by more than 40 per cent in 2011 – boosted by moves from financial adviser Towry and BSkyB

In the last three months of the year, take-up reached 87,050 sq ft, to produce a total of 398,159 sq ft across 106 deals for the year.

According to data compiled by the Leeds Agents’ Forum, the figure is nine per cent down on the five-year average of 437,386 sq ft.

The trend towards smaller sized deals below 5,000 sq ft continued in quarter four with only three transactions over this size: a 10,994 sq ft acquisition by Towry at Toronto Square, BSkyB taking 10,235 sq ft at 2 Wellington Place and the acquisition by Northgate Arinso UK of 5,314 sq ft at Riverside West.

Unusually, the out-of-town market finished more strongly than Leeds city centre in the final quarter at 110,667 sq ft. Two freehold deals – the 32,891 sq ft sale of Rawdon House to the EMIS Group and the 17,800 sq ft purchase of Fountain Court by TP Orthodontics boosted the figure.

The overall out-of-town take-up for the year reached 280,754 sq ft, an 11.4 per cent increase on 2010.

The Leeds Agents’ Forum said: “We anticipate take-up to continue to rise as occupiers absorb the existing stock as a result of forthcoming lease events and a lack of on-site supply. We also expect a couple of big names to sign pre-lets which could kick-start some much needed speculative space in the city core.”

Meanwhile, office take-up in Sheffield reached 351,672 sq ft in 2011 – 218,001 sq ft in the city centre and 133,671 sq ft in the out-of-town market. Key deals included Sky moving to 23,577 sq ft at Ventana House and Plusnet taking 52,916 sq ft at The Balance in the year’s biggest deal.

Looking ahead to 2012, Jeff Pearey, head of Jones Lang LaSalle’s Leeds office, predicted further polarisation in yields between primary and secondary properties across the Yorkshire retail, office and industrial sectors amid continued global uncertainty.

Gareth Owen, partner at law firm hlw Keeble Hawson in Doncaster, has earmarked residential development as ‘one to watch’. He said: “Investors will be looking for projects with higher income yield and there is an ever-growing demand for new residential property.”

Meanwhile, Richard Dunn, partner at Sanderson Weatherall in Leeds, believes mixed use schemes, such as Whitehall Plaza, could increasingly be the norm if building in the city is to progress. “(They) provide greater financial certainty for investors,” he said.