Leeds offices: sentiment to improve, says CBRE
CB Richard Ellis says its latest Leeds Offices MarketView shows that the occupational market in the city remains fragile, but claims that higher activity levels indicate an improvement in occupier sentiment going into the second half of the year.
Take-up in the city centre was 143,800 sq ft during H1 2010, lower than the 229,800 sq ft taken up in the second half of 2009 and also lower than the 184,200 sq ft completed during H1 2009, the group says. Overall, £151m of investment deals completed, compared with £103m in the first half of 2009. CBRE says pent-up demand is set to reactivate larger requirements “towards the start of 2011”.
Jonathan Shires, director of office agency at CBRE in Leeds, notes that the first half of 2010 was characterised by a greater number of smaller deals, reflected in the lower take-up overall. A total of 48 deals have completed so far this year (36 in H1 2009) but 41 of these were less than 5,000 sq ft – the average deal size has fallen to 3,000 sq ft compared with 5,100 sq ft in 2009. “There has been an absence of any significant lettings and the completion of only two deals above 10,000 sq ft,” he added.
Availability in Leeds at the end of Q2 2010 was 1.7m sq ft, down 6% from the end of 2009, and reflecting a drop in secondhand space – new space on the market remained unchanged at about 650,000 sq ft. “With only 35,955 sq ft under construction at 10 South Parade and no expected speculative construction, it is likely that the availability of Grade A stock will begin to trend downwards over the next months, supporting prime rental levels moving forwards,” Shires added.
Alex Whiting, senior director of investment for CBRE in Leeds, says the continued limited availability of debt finance means that future transactions depend on “the appetite of funds and cash buyers”. He expects the volume of transactions in the second half of 2010 to be much lower than that seen in the first half following a sharpening of yields so far this year.
