Leeds commercial market ‘buoyant’ as construction activity rebounds
CONSTRUCTION activity in Leeds is rebounding and the outlook suggests that the recovery has further to run, according the latest crane survey of the city by Deloitte.
There are 14 new starts recorded in the survey, of which 10 are new-build developments, compared with just three in 2013. These included the 202,000 sq ft Central Square development, and the latest phase of MEPC’s Wellington Place scheme.
Over 550,000 sq ft of office space is under construction in Leeds, an average of 99,000 sq ft per office scheme. This is three and a half times more than in 2013, fuelled by a growing tenant demand and rising developer confidence.
Angela Barnicle, director and head of real estate for Deloitte in Yorkshire, said: “Some commercial property developers continue to be cautious, but we expect to see sentiment strengthen further this year, and some of the previously-announced schemes in the city will start to take shape.”
A total of six office completions were recorded in 2014, delivering almost 215,000 sq ft. This is just over four times the amount completed in 2013, and above the 188,000 sq ft annual average for the first time since 2009.
Office leasing activity in the city centre was also buoyant in 2014, with the final quarter seeing a 10 per cent uplift, bringing the annual total of let space to 540,000 sq ft – above the 10-year average but down on the record level of 2013.
Schemes completed in Leeds since last year’s survey also include 80,000 sq ft of retail and leisure space and 532 student beds. The improving development activity across much of the Leeds market is exemplified by the retail sector, which has seen unprecedented levels of investment in recent years. In 2014, this included work starting on the 400,000 sq ft Victoria Gate scheme and the continuing redevelopment of the Merrion Centre.
Although 2014 was a strong year for commercial property schemes in Leeds, residential development continues to elude the city centre market.
Despite a stronger residential market in 2014, the Deloitte Crane Survey records no new developments and, with no construction starts, the pipeline remains flat. However, the city’s lettings market remains strong.
“At its peak in 2007, there were 3,800 residential units under construction in the city centre,” said Ms Barnicle.
“The tail-off in construction activity since then reflects not just the general market sentiment but is also a reflection on the Leeds City Living market given perception of oversupply of units in the boom years, which has now been corrected.”
The crane survey also highlights the importance of the city’s wider connectivity to drive future development.
The long-awaited construction of the £17.4m Leeds Station Southern Entrance – which began in January 2014 – and the proposed £250m New Generation Transport (NGT) trolleybus scheme are seen as key projects to drive that connectivity.
“Infrastructure and connectivity are key to the success of any commercial market. If the proposals for improvements to the public transport network in Leeds are approved they will have a great impact on developer sentiment,” added Ms Barnicle.
