Leeds is starting to look mispriced. Prime office yields have moved out to around 7%, levels typically associated with distress, yet the occupational market has held up far better. That gap between pricing and fundamentals is what is bringing the city back into focus for investors.

That disconnect is important, as in previous downturns, pricing and fundamentals tended to weaken together. Today, values have adjusted first, while demand for the right space has held up. For investors, that shifts the narrative away from relying purely on yield compression and more towards a stable income base, with upside to come.

Leasing demand is still there — just more selective

Leeds remains one of the UK’s tighter regional office markets, particularly at the top end. Grade A availability is limited, the development pipeline is constrained, and take-up continues to be driven by occupiers targeting high-quality, well-located space.

Schemes such as Aire Park and Wellington Place are a good reflection of this, where demand hasn’t disappeared, but has become more focused. Occupiers are making fewer decisions, but they are still prepared to commit to the right buildings.

That makes this less of a “distress” story and more of a re-pricing exercise in a market where the best stock continues to perform.

Rental growth is starting to come through

Leeds has historically sat at a discount to the other core regional cities, but that gap has been narrowing. Prime rents have been moving upwards, and importantly, deals are still getting done at the top of the market.

This matters from an investment perspective because it introduces a second lever beyond yield and rental growth in a market that is still catching up, rather than one that has already peaked. In simple terms, the income story isn’t static.

As ever, not all assets are equal. The combination of limited new supply and more selective demand is creating a clear split in performance. Well-located, amenity-rich buildings with strong ESG credentials and leasing visibility are continuing to attract interest. Secondary stock, particularly where capital expenditure is required, is facing a harder path.

Why Leeds stands apart

Leeds has the fundamentals that tend to attract international capital – depth of occupier base, liquidity, and a track record of recovery. The city’s mix of professional services, financial services, public sector, and more recently health and fintech, gives it a level of resilience that many smaller markets don’t have. It’s large enough to deploy capital with confidence, but still priced at a meaningful discount to London.

We’re beginning to see the early stages of international capital re-engaging, particularly from more income-led investors. French SCPIs are a good example, attracted by the spread between UK regional yields and those available in the eurozone.

Leeds is increasingly on that radar, not because it’s the highest yielding market, but because it offers a balance of income, liquidity and scale.

Other sources of capital, including Middle Eastern investors, had started to re-enter before geopolitical uncertainty stalled activity. The expectation remains that this will return as visibility improves.

Repricing creates a window

Pricing has reset more quickly than fundamentals in Leeds, creating a more rational entry point. As capital returns, the city is back in focus, not as a speculative call, but as a market delivering income with a clear route to growth.

Further information

Contact Simon Lister

Visit the Savills Leeds office for more information