Leeds should be a priority city for transport investment, the NIC says. Credit: Leeds City Council

Leeds office rental growth strongest outside London, says CBRE

24 August 2023 14:24 Neil Tague Comments (0)

According to the firm’s research, Leeds has recorded the strongest prime rental growth among 10 city office markets analysed over the period since the Covid pandemic.

The city’s prime rents stand at £37 per sq ft, reflecting an increase of 23% since the start of the pandemic, in Q4 2019 to Q2 2023.

This represents the strongest prime rental growth of any major office market in Europe, excluding the London West End core markets of Mayfair and St James’s.

Berlin’s prime rent growth since the pandemic stands at 16%; Milan at 15%; Paris at 14%, followed by Amsterdam at 9%.

With the consultancy namechecking flight to quality as employers seek to bring people back more regularly to the workplace, significant hikes were also recorded in Bristol and Liverpool, at 21% each; with Edinburgh and Birmingham at 19% each and Manchester at 18%.

CBRE said that the trend is continuing, evidenced by Glasgow prime rents reaching £39.50 per sq ft from the pre-Covid level of £32.50.

Despite overall take-up outside of London declining year-on-year by 13%, demand for the best quality space was high across the whole of the UK in H1 2023. Two of the three largest deals in Q2 took place in newly completed space.

Major Leeds office buildings to have let well this year include 11 and 12 Wellington Place, which attracted Lloyds in a 100,000 sq ft deal; Bruntwood’s West Gate; and Credit Suisse’s 26 Whitehall Road, where Mott MacDonald signed for 15,500 sq ft.

Space on standout floors and sustainability credentials were also cited by CBRE as big factors for occupiers.

Simon Brown, head of UK office research at CBRE, said: “One of the consequences of the supply/demand imbalance for the best quality space has been rapid rental growth at the prime end of the market. Deals transacted since the start of this year have set record high benchmark rents in most cities and many city office markets are recording prime rental values ahead of pre-Covid levels.”

Matt Willcock, executive director, office investor leasing, added: “Beyond London, our major city office markets are outperforming many of the major European markets – Berlin, Milan, Paris – in terms of prime rental growth and values.

“While broadly speaking take-up may have slowed, it’s clear there is healthy demand from occupiers seeking new, high-quality sustainable office space that enhances connectivity and wellbeing in a collaborative environment.”

The 10 city office markets outside of central London tracked by CBRE are: Aberdeen, Belfast, Birmingham, Bristol, Edinburgh, Glasgow, Leeds, Liverpool, Manchester and Southampton.