The first quarter of 2025 has echoed the latter quarters of last year when it comes to Leicester’s commercial property market and that, in itself, is the sense of the market in the wider county and East Midlands region too.
That’s the verdict of Eddisons’ Aman Verma, who leads the firm’s agency in Leicester from its office on the city’s Meridian Business Park.
While there are requirements by owner-occupiers in both the industrial sector and, to a lesser extent, the office sector, there appears to be a lack of good quality stock on the market as a whole.
There is a severe lack of availability of good quality second hand industrial stock which, inevitably, has pushed up demand levels for both freehold and leasehold opportunities – making it a highly competitive slice of the market. Yet prices for brand new stock see activity there sticking as developers, understandably, want to hold out for better returns.
Changes in office working arrangements over the past five years have seen businesses downsizing but wanting to retain a premium office offer to their hybrid workforce. Due to the lack of new Grade A office stock in Leicester itself, more and more are leaving the city altogether to out-of-town business locations.
Primary requirements to Eddisons’ Leicester office are for freehold, modern, detached industrial units – with a very keen appetite for between 10,000 sq ft and 50,000 sq ft. In the office market, enquiries are driven by owner-occupiers seeking freehold opportunities, ideally from 2,500 sq ft to 4,000 sq ft and with on-site parking.
The retail sector has borne witness to a change whereby in-town rents and demand have both reduced in contrast to out-of-town retail which is seeing increased demand. A case in point is Marks & Spencer who have vacated Leicester city centre and expanded its Fosse Park site on the city’s southern edge.
That being said, there are prominent locations in the city centre, such as at St Martin’s Square in the historic old town area, which has a strong rental demand in the food and beverage sector. Similarly, nearby Granby St is also attractive to fast food operators. Vacancy rates have increased in the Highcross Shopping Centre and, in order to fill voids, there have been temporary occupiers taking space.
Investment and development markets have changed little since last year in both being affected by, in recent times, historically high interest rates. Plus the development market has been hit by high labour and material costs.
That being said, Aman Verma believes that the first quarter of 2025 has been a period of adjustment from which the commercial market can now move forward. He confirms that the Leicester agency has been building a portfolio of client instructions during the first quarter that demonstrates the range of the city’s commercial offering.
Instruction highlights he points to are: two, companion period buildings, the Fraser Noble Building and 2 University Road, for freehold sale at £1.5 million, by way of auction on behalf of the University of Leicester; 22-24 Tithe Street, a modern single storey industrial unit, with sustainability features, available to let; and a development opportunity on a 0.85 acre site, with a £2 million guide price, on Frewin Street.
In looking to the coming quarters of 2025, Aman Verma concluded, “There is pent-up demand by occupiers and, with interest rates predicted to come down, investor and development markets will improve, both locally and regionally.
“Leicester is a vibrant city and it’s a very competitive business market. There are many entrepreneurial individuals who are involved in property investment and development and they are always looking for the right opportunities.”
