Wednesday, September 1, 2010
Public Sector Cutbacks Having Negative Impact On Office Market
CUTBACKS by the coalition Government have started to negatively impact on take-up in the Leeds office market, according to new research.
Both Leeds City Council’s 125,000 to 250,000 sq ft requirement and the NHS’s 40,000 sq ft requirement being put on hold had hit the market.
Take-up in the Leeds city centre office market in the second quarter of the year dropped to 48,552 sq ft.
Government officials have 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 then pulled in May after the election.
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 the second quarter where take up was down for the third year in a row to 48,552sq ft. It had already been hit after Leeds City Council’s 125,000 to 250,000 sq ft and the NHS’s 40,000 sq ft plus requirements were put on hold after the election.
The local property market has been relying 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.
Had the requirements materialised it was hoped that it might lead to some speculative development in the City Centre, but now that these are on hold it would take a strong developer build anything speculatively.