Demand for new office space is fuelling new developments in Leicester, according to a new report from national property consultancy Lambert Smith Hampton (LSH).
Its Leicester statistics for Q2 show that the city has seen an increase in office take-up, which leaves just 15,000 sq ft of Grade A space in the city centre.
Jane Taylor, director of office agency at LSH Leicester, said its analysis revealed that there is just 655,000 sq ft of office space available in both the city centre and out-of-town markets, down 2% from Q1.
The statistics also show that there is just 165,000 sq ft of out-of-town office supply in Leicester, with no immediate Grade A space due to a lack of new development over the past five years. Increased build costs and competition for sites from the currently lucrative logistics sector have exacerbated the issue over the past year.
However, a tranche of new developments are being planned to ensure that Leicester is able to accommodate growing businesses and attract newcomers into the city, said Jane.
“Although the immediate picture is one of lack of supply it is good news that pipeline discussions are coming to the fore on the back of the demand statistics,” she said.
In the city, the city council’s regeneration area of Waterside is expected to provide up to 50,000 sq ft of new build office space with a first phase potentially available in the market by 2018 . Adjacent to the railway station plans are being progressed for a potential new build office scheme for up to 60,000 sq ft, while the second phase of the out-of-town development at Watermead Business Park will see activity on site in the next few months with initial infrastructure works. This will then allow further office development on a design and build basis.
Q2 saw 15 office transactions in Leicester, which resulted in a total take-up of about 73,000 sq ft between March and June 2016, up from 60,000 sq ft recorded in Q1.
The biggest transaction of the quarter was the letting of One Marlborough Court, Watermead Business Park, a new Grade A, 23,000 sq ft office development, to an undisclosed occupier.
“Demand continues to outweigh supply when it comes to good quality out-of-town accommodation across the Leicester region,” she said. “There are high take-up trends in other out of town business parks such as Grove Park and Meridian Business Park key office locations close to Junction 21 of the M1.”
Out of the 15 deals, only one was for Grade C accommodation, which demonstrates the lack of demand and supply for lower quality facilities, said Jane.
“This is mainly due to stock of this calibre being withdrawn from the market so it can be converted to residential through permitted development rights,” she added.
