Leeds City Region
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LEEDS CITY REGION SPRING 2020 OUTLOOK SUMMARY DRIVERS OF GROWTH • Leeds city centre saw strong office take-up in 2019, set against the broader • Leeds is one of the UK’s key backdrop of political and business commercial centres, with an office uncertainty. The city’s economy will stock of over 20 million sq ft. It is be boosted this year by the arrival of the commercial hub of the Leeds significant, high-profile occupiers such as City Region with a diverse economic • The Government’s announcement Channel 4, HMRC, NHS Digital and Sky. base and a strong presence in sectors that the HS2 high speed rail line will such as financial and professional KEY ECONOMIC AND BUSINESS STATISTICS • The severe shortage of grade A city go ahead in full is very welcome. services, fintech, healthcare and Source: Experian, ONS, Land Registry, MHCLG, HESA This will deliver a new connection centre office space is constraining medical technology. take-up, but developers remain reluctant from Leeds city centre to locations YORKS & • Leeds City Region incorporates 10 including Sheffield, Birmingham LEEDS to commence large schemes on a HUMBS local authority districts, including key and London. The proposed station speculative basis. With several sizeable locations such as Wakefield, Bradford, will be integrated with the existing Growth – next 10 years enquiries in the market we expect Harrogate and York. This area has a infrastructure, incorporating access Economic growth 19.6% 16.1% healthy take-up in 2020, with further Employment growth population of approaching 3.1 million, to the city centre and the South Bank 5.2% 2.0% Population growth 4.8% 3.0% pre-letting activity and more which is projected to rise by around area, and acting as a catalyst for refurbishments of existing buildings to 100,000 over the next decade. The further development. grade A standard. total economic output of the Leeds Earnings and affordability • The line to Leeds is part of the second Average house price City Region was an estimated £68 £190,753 £168,382 • Given the lack of immediately available phase of HS2. This phase is to be Average house price growth, 2019 4.8% 3.9% billion in 2019 (Experian), which grade A office stock, we anticipate Leeds reviewed and combined with Northern Average house price to incomes 6.8 6.2 accounts for 57% of the total output for prime rents to increase to £34.00 psf Powerhouse Rail, the proposed east- the Yorkshire and the Humber region. west link from Liverpool to Leeds by the end of this year from the current Prosperity and productivity via Bradford, and will be rebranded benchmark of £30.00 psf. Out-of-town • The city has a growing ‘knowledge’ Average weekly earnings £534 £515 as ‘High Speed North’. This is an Unemployment rate (ILO) rents will also face upward pressure sector, boosted by the Innovation 4.4% 4.5% District, focussed around its leading important step, as improvements in GVA per worker 29,347 21,589 from the established £24.00 psf at academic and teaching institutions connectivity between Leeds and other Thorpe Park. including the University of Leeds, cities in the Northern Powerhouse will Skills and Innovation • Industrial occupier demand remains Leeds Beckett University, Leeds be key to future economic growth. % NVQ4 or above 38.2% 33.3% Students as % of population 6.9% 3.0% resilient. The low number of big shed Teaching Hospital Trust and Leeds Arts • Local infrastructure improvements Business births, 2018 4,065 23,405 University. The media sector is now deals in 2019 was largely the result of are also important. Current schemes becoming increasingly important, and highly constrained supply, although include the Leeds East Orbital Road, the arrival of Channel 4 last year should wider business uncertainty is playing a which will replace the existing Outer provide a catalyst for further demand. part. In the medium term, supply should Ring Road, easing congestion but also be addressed by new sites such as • Leeds is also home to some of the UK’s acting as a catalyst for development. Gateway 45 coming forward. premier retail space, including the 120- Completion is scheduled by the end unit Trinity Leeds, which transformed of 2021. • Commercial property investment in the the city’s retail offer when it opened in • The city region is also a strategic THE KEY LOGIC LEEDS AND GATEWAY 45 Leeds City Region totalled £1.3 billion 2013, and the Victoria Gate shopping distribution location and Leeds City SITES HAVE ATTRACTED AN IMPRESSIVE centre, which opened in 2016 and is in 2019, up on 2018. With the greater Region Enterprise Zone is now a RANGE OF DISTRIBUTION OCCUPIERS anchored by John Lewis. certainty provided by December’s focus for development activity. This decisive general election, we expect a • Rail technology is a thriving sector. 142-hectare area is located at junction higher level of prospective purchasers The Institute for High Speed Rail and 45 of the M1, along the new East Leeds • Development potential is not confined this year and more competition for System Integration (IHSRSI), part of Link Road into Leeds city centre. A to Leeds. York, for example, could see assets. However, for those buyers seeking the University of Leeds, will become simplified planning process applies significant development over the medium good quality assets, the availability of fully operational in 2021. The region within the zone, and there is a range term at the 45-hectare mixed-use York Central product will remain a key challenge is also home to the University of of business incentives. The area is regeneration scheme, with the potential to across all sectors. Huddersfield’s Institute of Railway home to the key Logic Leeds and create over a million sq ft of commercial Research. Although just outside the Gateway 45 sites and has attracted space. It has also been suggested that York is • Prime office and industrial yields should Leeds City Region boundary, Siemens an impressive range of occupiers under consideration to become the new home remain at their current keen levels of has announced plans to develop a £6 including Amazon, FedEx, John Lewis, of the House of Lords, if radical proposals to 5.0% and 5.25% respectively in 2020. million rail innovation hub at Goole, and Premier Farnell. It is situated relocate from London were to go ahead. City complementing its neighbouring rail within the wider Aire Valley Leeds of York Council is proposing to make the city manufacturing facility. regeneration area, which contains over car-free by 2023, part of its goal for York to 400 hectares of development land. become a carbon-neutral city by 2030. 2 carterjonas.co.uk 3 Take-Up phase of its new Temple district, a Figure 1 Leeds office take-up OFFICE 38,000 sq ft speculative office building. Source: LOAF, Carter Jonas • The Leeds office market saw total take-up of The Temple district will form a major City centre Out of town MARKET 5-year average total take-up just over a million sq ft in 2019, set against the element of the South Bank area, with Annual take-up, sq ft 10-year average total take-up wider UK political and business uncertainty. over a million sq ft of offices, retail, food 1,400,000 This figure was almost identical to 2018, & beverage, a hotel, residential and broadly in line with the average over the placemaking proposed on the 8.7-acre site. previous five years, and well ahead of CEG has planning consent for an office 1,200,000 the average over the previous 10 years building of 134,612 sq ft, although this will (870,000 sq ft pa). These trends are probably require a significant pre-let. 1,000,000 illustrated in Figure 1. • McLaren Property has now received • The 2019 figure was boosted by one large planning consent for its 330,000 sq ft 800,000 PRIME RENT deal, the 136,000 sq ft for occupation by scheme on Wellington Street, and is Sky Betting & Gaming at 4 Wellington Place, hoping to commence construction later £30.00 PSF 600,000 signed in the first half of the year. However, this year, although this is also likely to without this deal, take-up would still have require a significant pre-let. been in line with the 10-year average. 400,000 2019 TAKE-UP • At Quarry Hill, Caddick Developments is 1 MILLION • Demand was focused on the city centre, proposing over 100,000 sq ft of offices SQ FT which accounted for over 70% of total lettings plus leisure, residential units, retail and 200,000 in 2019. At 745,000 sq ft, this was the third a car park, as well as placemaking at its highest figure in the last decade, 12% over the Soyo scheme, and is already making 0 average for the previous five years, and a third significant progress. 2011 higher than the 10-year average. 2009 2010 2012 2013 2014 2015 2016 2017 2018 2019 • MEPC has now received planning consent • In contrast to the first half of the year, for the next phase of Wellington Place, which saw the Sky deal plus a sizeable which could total over 800,000 sq ft of DESPITE A SEVERE 71,300 sq ft taken by Link Asset Services, the office space. largest transaction in the second half was SHORTAGE OF • Allied London has submitted a planning only 31,175 sq ft, with Sky taking space at 26 GRADE A SPACE, application to repurpose the former THERE IS HUGE Whitehall Road at a rent of £23.00 psf.