Prime office rents in Leeds city centre will hit new heights this year, according to a report published by Knight Frank. Knight Frank’s UK Cities Report 2023 predicts that headline rents in Leeds will hit a record high of £38/sq ft, due to a combination of a lack of quality offices being built or comprehensively refurbished, coupled with growing occupier demand for space – take-up in the final quarter of 2022 was the highest for five years.
Eamon Fox, partner and head of development at Knight Frank in Leeds, said: “There’s no doubt, given the turmoil in the capital markets and projections regarding the economic outlook for 2023, investors are now assessing the markets with greater caution. But the flight to quality in the office market in the city will counter-balance this.
“Investors will be to be selective in choice, targeting best-in-class new builds, refurbishments and buildings where a green premium can be applied. At the same time I expect organisations will change their stance on hybrid working and become firmer on employee time in the office, thus supporting occupational demand in the market.
“With Leeds named as UK city of Culture for 2023, the city should benefit from the exposure of a global audience. The presence of Channel 4 in the heart of the city has had a very significant knock-on effect, building on the city’s reputation of being a magnet for bright young tech, media and creative companies, with state-of-the-art buildings such as Kinrise’s 34 Boar Lane and Boultbee Brooks’ Tailors Corner welcoming some of the best in class. We are now seeing law firms open in Leeds as a direct result of the investment by Channel 4, as well and pre and post-production firms.”
Fox added that deal sizes will reduce by up to 30% thanks to hybrid working, but he believes occupiers will be “willing to pay more to secure shiny new state-of-the-art workplaces that promote strong mental health and employee wellbeing”.
