Rockspring sets new rental tone for Leeds offices with Burberry relocation

By Paul Norman Kasmira Jefford - Thursday, May 18, 2017 8:30

Rockspring has completed the largest office letting deal in Leeds this year at 6 Queen Street. The fund manager declined to name the tenant this morning but CoStar News revealed earlier this month that it is listed fashion giant Burberry.

Rockspring Property Investment Managers and development partner Marshall, on behalf of Rockspring Hanover Property Unit Trust have let 46,000 sqft at 6 Queen Street to what the parties described as a FTSE 100 company on a 10 year lease.

The deal signifies the largest office letting deal in Leeds this year and sets a new rental tone for Leeds at £30 per sq ft.

The building, which is located in the heart of Leeds’ business district, provides a total of 70,940 sqft of offices over six floors with two terraces.

Hanover acquired the site in October 2014 in response to what it termed "major demand for high quality office accommodation in the Leeds market, which was being met by a low supply of available space."

The remaining ground and first floors at 6 Queen Street, which total 24,872 sqft, are experiencing strong interest from potential occupiers, it added.

Mischa Davis, Fund Manager RHPUT, said: “Securing this high profile tenant reinforces Hanover's strategy of making a small allocation to calculated letting risk in strategically located, brand new Grade A buildings. Completing this key phase in the asset’s business plan ahead of schedule will be a key driver of performance for Hanover and will play a significant part in delivering three year out-performance against its Benchmark.”

Rod Mordey, Head of UK Asset Management at Rockspring added: “We are delighted to have secured a FTSE 100 company as our first tenant at 6 Queen Street which justifies the attention paid to the detailed design, unique external spaces, build quality and sustainability features.

“This success is the latest in a line of other speculative development and leasing wins for Hanover in recent years, including Chrome 102 in Minworth let to DHL (2016); The Stanza Building in Uxbridge let to Nexen (2013); Century Court at Westcott Venture Park in Aylesbury where tenants include Donna Karen (2015); and Ash Way Phase 2 at Thorp Arch, also in Leeds where tenants include Avacta plc and Beer Hawk (2016).”

Established 50 years ago, Hanover is an actively managed, open-ended, UK-focused real estate fund which, as at 31 March 2017, had £503m under management.

Hanover was represented by Knight Frank and Carter Towler while Cushman & Wakefield acted for the new tenant.

CoStar News revealed at the beginning of May that Burberry was in talks to take the space in a vote of confidence for the city’s office market.

The luxury goods company, best known for its signature Yorkshire-made trench coats, had confirmed the day prior that it would relocate around 300 staff from its London headquarters to an undisclosed Leeds office as part of cost saving measures.

The new business services centre will open in October, and will bring together teams from finance, HR and procurement as well as some Customer Service and IT roles.

Burberry has begun the consultation process with staff at its offices at Horseferry House, where they will be offered the chance to relocate or face redundancy. The company, which is targeting £100m of cost savings, said the move will allow it to reduce its space requirements at the Derwent London owned building, where it will remained headquartered.

Christopher Bailey, chief creative and chief executive officer of Burberry Group said at the time: "This is an important move for Burberry as we continue to deliver on the strategic priorities we outlined last year. In addition to the benefits it will bring to the business, opening an office in Leeds reinforces our commitment to the UK and to Yorkshire, home of our iconic trench coat."

Last year, Burberry put plans for a new £50m manufacturing and weaving facility in Yorkshire, first announced in 2015, on hold amid economic concerns. A spokesperson for the company said these were still under review. However local agents are hopeful that the opening of a new office in Leeds will see those plans put back into action.

The company currently has around 800 manufacturing staff based in two separate sites in Castleford and Keighley, which would be consolidated into a new factory on the South Bank in Leeds if plans for Project Artisan are revived.

Commenting on the office move at the time, Jeff Pearey, lead director at JLL for Yorkshire & North East, said: “Burberry’s announcement is really strong news for the Leeds office market, which tends to rely on indigenous companies for take-up of new space.”

Demand for office space in Leeds improved in the second half of last year, despite take-up for 2016 falling short of the long-term average and falling by a third on the previous year.

Prime headline rents in Leeds city centre currently average at around £27.50 per sq ft. But recent a report by Knight Frank suggests that rents could reach £30 per sq ft by the end of the year thanks to improvements in the city’s economy and tenants relocating into more modern and greener accommodation coming onto the market, such as Rockspring’s 6 Queen Street, in a bid to reduce costs.

pnorman@costar.co.uk and kjefford@costar.co.uk

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