Net absorption of office stock within central Leeds looks set to increase, and due to a limited development pipeline during 2018 and 2019, there will be a pinch point on availability. 2018 will be a year for renewal; even though there are no new builds coming through, there are some high quality refurbishments.


The Office of Budget Responsibility’s November forecast for UK 2017 GDP growth was 1.5%, although the Q4 2017 PMI average is consistent with quarterly GDP growth of between 0.4% and 0.5%. This would therefore mean that the UK economy would have actually grown by 1.8% in 2017 and, if confirmed, would be a boost to business confidence, including occupiers, developers and investors. Furthermore, if anything positive emerges from the trade component of the Brexit talks, then the added confidence may begin to push business investment and the economy forwards, far more positively than many had forecasted.


The search for yield will draw investors towards the regional markets, which together with stronger than predicated Financial Indicators, should see more development and investment activity in key regional markets.


Large scale occupiers are increasingly weighing up the benefits of ‘northshoring’ roles from central London to regional cities, in order to take advantage of both lower property costs and lower staff costs. The combination of the Leeds office market successes in 2017, record take up levels, confirmed rental growth and their current position as the most cost effective location base out of the ‘Big 6’ UK regional office markets, should bode well going forwards.


The Lloyds Bank Regional Purchasing Managers’ Index (PMI), September 2017, highlighted Yorkshire as experiencing the fastest growing manufacturing and service sector growth region across the UK. Leeds is forecast to see an office-based employment growth of 5.1% over the next five years, driven by a high exposure to Professional, Science and Tech jobs, above the UK average of 4.6% over the same period.


Public Services accounted for almost 40% of take-up in Central Leeds during 2017, and whilst we anticipate more Public Services commitments during 2018, this sector is unlikely to dominate the market as per 2017.


Colliers International | Perspective


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