Following recent research, Leeds is becoming known as the centre of digital excellence as many of the commercial property deals that have recently been completed were centered around technology, media and telecommunications.
Following the decision to leave the EU, many of the commercial property headlines have been based around the concerns of a slowdown in the market. The uncertainty surrounding the decision has resulted in the number of deals completed being lower than the same period last year.
Despite this, many large deals took place that involved large companies. The completion of large projects will help to improve supply and many have been subject to pre-lets although there are opportunities for tenants to take advantage of the most recent Grade A office space in the city.
In the city, prime rental properties are costing around £26.50 per sq ft although this is likely to rise to £28 by the end of the year. Leeds is now offering new offices that come accompanied with rental costs that are extremely competitive while also offering businesses that chance to take advantage of a workforce that is both skilled and diverse. This is what makes Leeds extremely attractive to local businesses and companies looking to move from other areas of the UK where costs are higher, such as London. The investment market in Leeds is one of the most attractive in the UK as there are a number of opportunities available to investors.
Interest has been high during this year and a total of £102.5m worth of deals took place during the first six months of 2016 which is an increase of 10% when compared to the final six months of last year.
One of the biggest deals completed this year involved Leeds City Council who purchased 3 Sovereign Square for £43.75m. This is a scheme that is located close to Leeds station and it makes up some off the larger redevelopment projects within the city which aims to change the environment in and around the city.
A deal involving law firm Addleshaw Goddard saw them take 51,000 sq ft of 3 Sovereign Square, a scheme that is expected to be completed during the second half of 2016. While another large company took St. Paul’s House from Boultbee Brooks Real Estate for £23.7m seeing an initial net yield of 6%.
These deals only prove that there is an increasing desire for businesses to invest in office schemes within Leeds despite the uncertainty that surrounds the decision to leave the EU. However, the interest is likely to decrease in the short term as businesses analyze how the market will take on the changes that will come from leaving the EU.
However, the increase in the number of redevelopment projects that will take place in the future, it is highly likely that Leeds will continue to offer attractive opportunities for investors who are looking to take on regional office assets.
Hopwood House are experts in property investment, with a large selection of student, buy-to-let and commercial property investments in Leeds.
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Daniel Peacock