Jones Lang LaSalle held its annual breakfast seminar in Leeds today where the property firm gave its predictions for the outlook for the UK economy, and the implications of its forecasts for the office market in Leeds.
Speaking to guests at the event, Jon Neale, head of Jones Lang LaSalle’s UK Research team, said: “Leeds appears to be very well positioned to capitalise on the economic upswing.
“The city’s strengths in professional, technical and business services suggest that it will see some of the fastest growth in office jobs of any regional city over the next five years. In line with trends globally, this is likely to result in more occupier demand for city centre office space which could result in further pre-lets next year and beyond. There will also be on-going need for refurbishment and redevelopment.”
However Jeff Pearey, head of the firm’s Leeds office pointed out that the mismatch between existing grade A city centre supply and active demand is marked and with very little new office stock being built landlord’s incentives will start to harden.
“Available grade A office supply currently stands at 160,000 sq ft and with just 134,000 sq ft under construction – it’s clear the current replacement rates just don’t stack up. The climate in the South East property market is one of “refurbish or build” before it’s too late. We are getting very close, or perhaps have even reached the point, where this can be equally said about Leeds,” Jeff added.
Whilst there are valid concerns about the diminishing levels of grade A office supply due to increased occupier activity Jon Neale went on to point out that technology and sustainability requirements will also play a role by making increasing amounts of office space obsolescent, unless significant investment is put in place.
Jeff Pearey concluded the morning’s presentation: “Business confidence in the region and developer funding is improving but there remains a question mark over deliverability of many sites.”
“A raft of good quality office refurbishments and upgrades, such as the likes of No 1 Whitehall Riverside and Minerva, will go some way towards replenishing the shortage of grade A and with a squeeze on office space over the next five years, rents – for prime stock at least – may rise more quickly than many expect.”
