Regional cities are the ‘powerhouses for economic growth’

The UK’s regional cities will be “the powerhouses for economic growth” over the coming years, the CBRE’s national research director for the organisation said.

At CBRE’s annual market overview held in Leeds on Thursday, Andrew Marston said: “Growth rates in many of our regional cities are expected to be a lot higher than the growth rates that have been forecast for the UK as a whole, and this general trend continues in the data collected for the next five years as well, on average.”

Marston’s research team analysis data from ten regional cities outside of London.

The growth rate for Leeds in 2018 is 1.4% and this is expected to increase by a further 1.9% from 2019-2022. Sheffield has recorded a growth rate of 1.4% and this is again expected to climb by 1.7%.

Marston also noted that while businesses confidence is still “relatively strong”, it has softened over the past year. For 2017, Yorkshire recorded business confidence at 57.9%, whereas for 2018 so far this has decreased to 54.7%.

Speaking on office demand among regional cities, Marston told attendees: “On the whole across the regions, regional office take-up has been keeping pace with the strong years we saw between 2013 and 2017, and it is indeed ahead of the position we had this time last year.

“So far this year, there has been nearly 4 million sq ft of office take-up across the ten cities, compared to about 2.8/2.9 million sq ft seen during the first half of 2017.”

Here in Leeds, Marston said that the city has been “running slightly above average” as total office take-up for the first half of 2018 was in excess of 300,00 sq ft which is an 18% increase when taken on a five year average. The year-to-date figure is forecast to be just over 525,000 sq ft.

Marston went on to discuss how the government has been a “real feature” of regional office take-up over the course of the last 18 months, which has taken pre-let’s in many of the big regional cities.

Among these deals is the Government Property Unit agreeing a 25-year pre-let on 378,000 sq ft (35,117 sq m) at the Wellington Place development in Leeds city centre. The GPU will move in to buildings 7 & 8 in 2020.

In terms of the Leeds office market, Marston said: “We have a wide selection of occupiers taking space so far this year in Leeds, from professional services such as Walker Morris through to corporate firms such as the owners of Jet2, Dart Group.”

Marston also noted the rapid expansion of the serviced office sector and the more widely flexible office space operators, in what he called “the flexible revolution.”

Part of this revolution is co-working space Avenue HQ which is opening a 35,000 st ft workspace community building in Leeds city centre, offering 200 co-working spaces and 35 offices in various sizes.

The logistics sector in Yorkshire for the first half of 2018 is “exceptionally strong”, Marston also  noted. At the start of the year, Clipper Logistics secured a 615,000 sqft logistics warehouse in Sheffield to service its major PrettyLittleThing contract, marking the largest logistics letting signed in the UK this year.

Electronics giant Premier Farnell has also pre-let a 361,000 sq ft pre-let distribution unit at Logic Leeds on a 20-year lease.

Marston concluded by telling the audience that due to this growth regionally and the UK as a whole, “many of the regional city economies are going to outperform growth across the rest of the UK, despite major headwinds the UK will experience over the next year or two.”