Rents for prime commercial property in Leeds city centre will break all records this year, according to a brand-new report by global property consultancy Knight Frank this week.
Knight Frank’s UK Cities Report 2023 predicts that headline rents in Leeds are heading towards £38 per sq ft.
According to this report, this record-busting increase is down to a combination of quality new offices being either built or comprehensively refurbished and the increased pipeline of occupier demand.
This prediction comes hard on the heels of the news that the office take-up in Leeds for the last quarter of 2022 was the highest for five years.
Eamon Fox, partner and head of development at Knight Frank in Leeds, said: “There’s no doubt, given the turmoil in the capital markets and projections regarding the economic outlook for 2023, investors are now assessing the markets with greater caution. But the flight to quality in the office market in the city will counter-balance this.
“Investors will be selective in choice, targeting best-in-class new builds, refurbishments and buildings where a green premium can be applied. At the same time I expect organisations will change their stance on hybrid working and become firmer on employee time in the office, thus supporting occupational demand in the market.
“With Leeds named as UK city of Culture for 2023, the city should benefit from the exposure of a global audience. The presence of Channel 4 in the heart of the city has had a very significant knock-on effect, building on the city’s reputation of being a magnet for bright young tech, media and creative companies, with state-of-the-art buildings such as Kinrise’s 34 Boar Lane and Boultbee Brooks’ Tailors Corner welcoming some of the best in class. We are now seeing law firms open in Leeds as a direct result of the investment by Channel 4, as well and pre and post-production firms.
“There are some tremendous new office buildings coming on stream next year, notably City Square House, where 83,000 sq ft has been pre-let to DLA Piper UK and 20,000 sq ft to insurance giant Markel. Meanwhile, Globe Point and 12 King Street have both already attracted prestigious pre-lets.
“There are two other trends worth noting – the strength of legal sector continues apace, with Knights taking space at the Majestic, DLA moving to City Square House and Brabners opening a new office in the city. At the same time, the regions continue to attract significant new occupiers like the National Infrastructure Bank, the Bank of England and the Financial Conduct Authority, for example.
“Finally, I believe deals will get smaller by up to 30%. Working from home has led both employers and employees to realise that they don’t need the same amount of space as they have needed in the past. However, although individual space requirements may diminish, there will be a flight to quality, with occupiers willing to pay more to secure shiny new state-of-the-art workplaces that promote strong mental health and employee wellbeing.”
