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Office rents in Leeds set to rise to record levels

Headline office rents in Leeds will rise to a record £28 per sq ft by the end of 2016, according to new figures released by global property consultancy Knight Frank.

Knight Frank believes that the broadening economic recovery is feeding through to improved occupier demand. This, together with the diminishing availability of Grade A stock and lack of significant speculative development completions over the last few years, is driving rental growth in Leeds.

Elizabeth Ridler, office agency partner at the Leeds office of Knight Frank, commented: “The office market in Leeds is recovering from the difficult recent years. Grade A rents are now more than £26 per sq ft, their highest for five years, and are expected to rise further over the next two years.

“This reflects not just a shortage of quality stock, but also a surge in confidence. It has led to a return to serious speculative development and now the Leeds city skyline is welcoming back cranes. Recent deals such as the acquisitions of Yorkshire House and City One, the biggest development site in the city, underpin this optimism.

“The impressive turnover during the past three months reflects an increase in buying opportunities in Yorkshire, as some investors have sought to capitalise on significant price increases over the past 12 months. With evidence of rental growth returning, investor appetite is likely to focus more readily on well–located, short income stock where income can be enhanced through active asset management.

“This, in turn, will keep confidence flowing, especially as London investors are increasingly attracted to the strong fundamentals of regional property, especially in Yorkshire. It would be foolish to be over-confident with the upcoming General Election and a possible interest rate rise on the horizon.

“ But, given the dreadful battering the commercial property market has taken in Yorkshire, and across the UK, since the credit crunch, the revival in confidence in the office market this year should be warmly welcomed,“ she added.

This was posted in Bdaily's Members' News section by Robert Beaumont .