Latest Public Sector Cuts Impact On Leeds Office Market
The Leeds office market has been dealt a blow after the latest set of Government cut backs saw more public sector property requirements pulled from the City in the last few weeks.
Government officials announced that around 15,000 jobs (out of 80,000) at the Ministry of Justice could be axed in an effort to save £2bn from its £9bn budget, meaning that any potential relocation to Leeds from London and the South East has been quashed. Industry experts estimated the requirement at around 215,000 sq ft earlier this year but it was put on hold in March and has now been pulled.
It was also announced that England’s public spending watchdog, the Audit Commission, which employs over 2,000 people and has an office at Leeds City Office Park, is to be scrapped. This will bring over 7,950 sq ft of “tenanted” space to the city’s office market.
The market is fragile following poor performance in Q2 where take up was down for the third year in a row to 48,552 sq ft. It had already been hit after Leeds City Council’s 125,000 - 250,000 sq ft and the NHS’s 40,000 sq ft + requirements were also put on hold after the election.
Office agency surveyor Steven Jones said: “The local property market has been pinning its hopes on these major public sector requirements, with rumours that Highcross’ Broadgate (169,000 sq ft), Deltalord’s The Mint (115,000 sq ft), and IVG’s Latitude Red (122,000 sq ft) would have satisfied them. There is however some optimism as agents look to other potential requirements later this year.”
He added: “It was hoped that had all the public sector requirements come to fruition this would have spurred speculative development, however unless there is development, Leeds might not be able to attract a pre-let for at least the remainder of the year.”
For more information on the Leeds office market contact Steven Jones on 0113 386 8802 or steven.jones@ryden.co.uk
