An overview of the commercial property market in Leeds
According to recent research published by BNP Paribas Real Estate, the local commercial property market in Leeds is characterised by two opposing trends. In the first place, there are many positive indicators related to occupancy and take-up rates. However, investment levels are weak and the volume of transactions is nowadays significantly lower than it was in 2011.
As of the third quarter of 2012, the total take-up rates for commercial property in Leeds reached 335,000 square feet. Take-up rates are 11 per cent higher than in 2011, and this trend also applies to out of town commercial floor space, which in 2012 amounted to 274,000 square feet, a number that is 62 per cent higher than the previous year's figures. The latest data show that current availability levels in Leeds are set at 1.7 million square feet.
A 2011 survey by Jones Lang LaSalle showed that the commercial property market in Leeds was the strongest out of 105 British cities, and that occupancy levels came close to those in the UK's capital.
Overall, average headline rents for commercial property in Leeds amount to £25 per square foot, although this figure does not take into account rent-free periods that can reach up to 36 months for long-term leases.
Some popular locations for prime commercial property in Leeds include:
Trinity Leeds - Due to open in 2013, this development will provide over 1 million square feet of retail space in Leeds' city centre.
White Rose - Since its redevelopment in 2005, the White Rose shopping centre has become a top class location for retail space in Leeds thanks to its 680,000 square feet of floor space.
West One - West One is adjacent to the city's West End. This is one of the latest business centres to have been built in Leeds, and it mainly offers office space in units that range from 430 to 32,000 square feet.
Broadgate - Broadgate offers 160,000 square feet of refurbished and Grade A office space at one of Leeds' most in-demand locations. Retail units are also available.
The Mint - This is one of the newest developments in Leeds, which has added 127,000 square feet of Grade A office floor space to the local market.
Office space in Leeds
During the first three quarters of 2012, investment in the Leeds office property market has totalled £57.6 million. This figure represents a sharp decrease of £185 million over the same period last year. Nevertheless, demand for rental office space has experienced a rise in the Leeds market, and just in the second quarter of 2012 more than 145,000 square feet of prime office space were let.
Enquiry levels for office space have been steadily rising since the first quarter of 2010, and Leeds is one of the three regional centres where Grade A availability has actually increased since the beginning of the financial crisis. The supply-demand ratio in Leeds reaches 2 per cent, on a par with other key economic hubs like Manchester or Glasgow.
In terms of headline rents, prices per square feet have remained stable over the past seven quarters. Currently, average office space in Leeds costs £24 per square foot. Although prices have been stable as of late, the current headline rents are still well below pre-recession levels, as average rents in 2008 were in the region of £26 per square foot for Grade A office space. However, experts predict that from 2013 onwards we might see an increase in prices as the availability of Grade A office space tightens.
Retail space in Leeds
Generally speaking, the retail property market in Leeds is robust, although lack of funding and reduced investor confidence have meant that the possibilities for new developments are very scarce indeed.
One of the most significant investments that have taken place as of late in the retail property market in Leeds relates to the Trinity Leeds retail centre. Although the centre has not yet opened, more than 80 per cent of the available retail space has already been pre-let. Retail vacancy rates in Leeds currently stand at 16 per cent.
Industrial space in Leeds
Since 2010, demand for industrial space in Leeds has experienced a surge, particularly from businesses in the distribution and logistics industries. The highest demand has been seen in small-sized industrial properties, and it is expected that this trend will continue throughout 2013.
The past year has seen full occupancy in industrial estates like Dartstone West. Maybrook Industrial Park has been built thanks to one of the region's largest investments in industrial property, and during 2012 net yield values for this property have reached an impressive 8.9 per cent.
