Leeds 2021 Forecast Leeds

2021 Forecast

Of the vast pipeline of regeneration schemes across the city, Vastint is due to begin construction on the next phase of its Aire Trend watch Park scheme, the centrepiece of the South Bank district regeneration project. The Hyperlocal Emphasis has been placed on shopping and 300,000 sq ft office development will include socialising locally by the local government. ground floor retail and leisure, alongside a new two-hectare city centre park. No place like home Following the 2020 homeworking In the office market, there are two exceptional pre-let deals experiment, anecdotal evidence suggests that are expected to complete during Q1, providing some that some office occupiers will downsize encouragement for the year ahead. DLA Piper are lined up for by up to 30%, although this will vary considerably. 85,000 sq ft at City Square House, which whilst undoubtedly good news is a reduction on the 110,000 sq ft expected pre-Covid and an indication of the rationalisation in space that occupiers are Building a recovery looking to achieve; with anecdotal evidence suggesting many will Regeneration continues to be a focus and downsize by up to 30%. investment is being made into the city. Executive Summary £500,000 will go towards the completion of These changing requirements will clearly depend on the nature the Leeds Liverpool Canal and £8.6 million of the business. The largest out-of-town deal for several years is has also been earmarked towards Leeds City – Major regeneration programmes in Leeds Last year we saw major regeneration programmes in also expected to transact: a 135,000 sq ft pre-let to Lovell Financial Park, South Bank. continue to act as a significant catalyst for Leeds act as a significant catalyst for further public at Thorpe Park Business Park. The company has retained its pre- further public and private sector investment and private sector investment which ultimately will Covid requirement due to the security nature of the business. which ultimately will lead to substantial lead to substantial economic growth for the city. economic growth for the city. Whilst the pandemic has slowed things down to some degree, the regeneration programme, with particular – There is very little immediately available focus on the South Bank places Leeds at the centre grade A office space in Leeds city centre and for further public and private investment. no speculative space under construction. Yorkshire big box take-up However, Vastint will begin construction on a All major sectors were impacted to some level in Leeds, however, 300,000 sq ft office development with ground hospitality, leisure, real estate, manufacturing and construction 6 floor retail and leisure on the next phase of its were the hardest hit sectors. Real estate and construction saw an Aire Park scheme, South Bank. uplift in activity when restrictions were eased however leisure and hospitality continue to struggle. 5 – We expect the strength of the big box market The National Infrastructure Commission has recently seen in the second half of 2020 to continue recommended giving the eastern route of HS2 a lower priority this year, as strong demand and diminishing 4 than improvements to regional, east-to-west rail links between supply puts upward pressure on land values. cities. While this could impact the local economy, it may provide – Footfall levels have been low in comparison more targeted potential improvements in productivity and 3 to previous years for obvious reasons and connectivity. More immediately, regeneration continues to be a ive year average focus and investment is being made into the city. £500,000 will the local government and retailers have had 2 to be very proactive with various concepts to go towards the completion of the Leeds Liverpool Canal that will encourage footfall back to the city centre. help boost tourism and leisure and create a low-cost travel link for access to employment opportunities. £8.6 million has also been 1 earmarked towards Leeds City Park - a scheme to transform road space in the South Bank area to create the largest new city centre 0 park in the UK and improve cycling and walking facilities in one of 2016 201 2018 201 2020

Europe’s largest regeneration programmes. Such initiatives will Million sq ft continue to boost the local economy.

© 2020 Avison Young UK. All rights reserved. E&OE: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young. Given the effect of Covid on some sectors and companies, The retail and leisure development The Springs, for example is we do anticipate seeing a slight increase in the number of based on turnover rents. There will inevitably be a contracting Leeds Footfall freehold opportunities from this route, but still an insufficient in the amount of retail floorspace in Leeds as there is likely to Springboard number to satisfy latent demand. be elsewhere in the UK, particularly in light of recent casualties 200,000 in the retailing world. Strong fundamentals in the occupier market will continue to drive developer demand and exert upward pressure on land In one of the most prominent mixed-use schemes, Leeds values. The latter have increased considerably over the last City Council is working with Hammerson to bring forward a 150,000 few years to £550-650,000 per acre and given the level of planning brief for the redevelopment of 5 hectare Eastgate interest from both developers and occupiers, we expect these Quarter enabling the delivery of a vibrant and sustainable levels to be maintained. neighbourhood including entertainment, leisure, retail, 100,000 offices, private residences and hotels. There continues to be a blurring of the lines between the retail and leisure space in Leeds. Whilst leisure has clearly The residential market continues to see relatively robust been impacted, Leeds has an attractive leisure and theatre activity levels in terms of developments. The largest scheme is 50,000 offer and is expected to bounce back relatively well in 2021. Monks Bridge, a 665-home development across five different Emphasis has been placed on shopping and socialising locally blocks being constructed to the south west of Leeds city by the local government. There is also a huge blending of the centre. Student housing is also still active - Altus House is 0 daytime and night-time economies with traditional daytime currently under construction and will produce a 38-storey occupiers innovating the use of their space for the evening tower in Arena Quarter. In addition, a planning application

uly 2020 April 2020 May 2020 une 2020 March 2020 crowd and vice versa. has been submitted for a 45-storey tower on Merrion Way anuary 2020 August 2020 February 2020 October 2020 December 2019 September 2020 November 2020 totalling 705 bedspaces and planning has been granted for a Footfall levels have been low in comparison to previous years new 32 storey building at 44 Merrion Street, for 660 students. for obvious reasons and the local government and retailers There is very little immediately available grade A space in However, with AEW / Panattoni on site with Wakefield 515, have had to be very proactive to encourage footfall back to Leeds city centre and no speculative space under construction. and PLP with 230,000 sq ft at PLP Wakefield, together with the city centre. There continues to be a blurring of the However, a speculative scheme will get underway this spring. Of Tungsten’s proposed 230,000 sq ft unit at Interchange 26, the vast pipeline of regeneration schemes across the city, Vastint this is being addressed going into 2021. At the upper end, Following on from the Trinity Kitchen concept, Kirkgate Market lines between the retail and leisure space is due to begin construction on the next phase of its Aire Park occupier requirements can often be bespoke, and we expect and Millennium square foodhalls are likely to bring a welcome in Leeds. Whilst leisure has clearly been scheme, the centrepiece of the South Bank district regeneration to see some design and build solutions in addition to take up boost to the city centre offering. We are continuing to see a number of retailers embroiled in some sort of negotiation impacted, Leeds has an attractive leisure project. The 300,000 sq ft office development will include ground of speculative units. Supply of modern secondhand space has and theatre offer and is expected to bounce floor retail and leisure, alongside a new two-hectare city centre been low and is expected to continue to be so. around CVAs or turnover based rents. Whilst there is significant park. In addition, CEG has announced that it will commence pressure on retailers at present its very much a tenant’s market back relatively well in 2021. The mid box market has seen considerable development 38,000 sq ft speculative Globe Point early this year, having signed with landlords facing empty buildings or accepting retailers’ across the region, with schemes by the likes of Total a building contract. With the reduction in requirements and terms such as turnover based rents in order to capture some Developments, CDP, St Modwen, Gregory Developments and return of grey space, we expect an increase in supply levels. With form of rent. Network Space amongst others. The majority of those built occupiers likely to look for less but better-quality space, prime have let well, with rental levels increasing to the region of space will perform better than secondary. £6.00-7.50psf depending primarily on size and location. Given A further positive statement for the office market is the the strength of the market and the continued movement of £84 million purchase of Bridgwater Place by M7, who will be capital, we have started to see to see investors wanting to buy listing the asset on the IPSX property exchange along with its vacant mid box units and developments for letting, and this other acquisition of the Mailbox in Birmingham. is likely to increase during 2021. There are further schemes proposed across the region, including in Rotherham, Sheffield The big box market has seen record take up in 2020, and this and Leeds. The majority of mid box demand is satisfied by is expected to continue into 2021, given the growth in on-line standing units, rather than design and build. retail and the deals already being discussed and in planning. Amazon continue to dominate the market, particularly with An increasing trend is a desire to acquire freehold premises, their new four level 2 million sq ft model. primarily from locally owned businesses, and typically up to around 60-70,000 sq ft. These occupiers have been frustrated Whilst there has already been a reasonable amount of by the real lack of opportunities to acquire, with there being speculative big box development in South Yorkshire, this has very few willing vendors. A handful of freehold sales have not been the case in West Yorkshire. been driven by company administrations, with the majority attracting strong interest.

Claire Paraskeva Managing Director, Leeds [email protected] +44 (0)113 280 8052

Daryl Perry Director, Head of UK Research [email protected] +44 (0)20 7911 2340

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