Uncertainty fails to stem demand for good quality commercial property

Yorkshire and the Humber continues to have a shortage of big, high quality commercial units, according to a property expert who addressed a gathering in Leeds city centre.

Property services and investment business CBRE staged its latest annual Property Market Insight Briefing, which featured keynote speakers Simon Brown and David Aspin. Brown is a director in the CBRE Research team based in London, while Aspin is founder of property investment and development company, Munroe K. Aspin’s firm owns the White Rose Office Park, Leeds.

Brown said the key overall economic indicators for the UK suggest a slowing economy. “The only positive is the jobs numbers, with unemployment being about as low as it ever has been,” he said.

He outlined how Leeds had seen 700,000 sq ft of office space taken up in the 12 months to quarter three of 2019, a 4% fall from the five-year average. On a league table of nine UK regional cities for office take up performance over this period, Leeds is in fifth place, just behind Edinburgh, with Manchester in first place.

In total, these nine regional cities in the UK had seen 6.3m sq ft of office space taken up in the 12 months to 2019 Q3, compared with an equivalent figure of 7.4m sq ft in 2018. Demand for the office space in Leeds included 37% from the Business Services sector, 26% from Consumer Services and Leisure and 17% from Creative Industries.

Guests at the CBRE presentation were told that steady prime rental growth is continuing, though Brown said the “polarised” commercial property market was witnessing a marked divergence between high performing, new, good quality stock and poorer quality, secondhand buildings.

“Availability of new space is low and demand for it is really high,” he said. “In the logistics market, demand has slowed a bit in 2019 but it’s still relatively high. There’s been a massive increase in demand for big units, which is driven by online retailers.”

He said the number of new jobs forecast to be created in Leeds over the next five years, predicted at nearly 16,000, could mean a demand for an extra 1.4m sq ft of additional work space in the city.

And he emphasised employees increasingly expected to be based in high quality, attractive offices, with their employers wanting smart high-tech buildings which reflect a positive brand image, and a commitment to sustainability and staff wellbeing.

Following the market briefing, Aspin was asked by CBRE senior director Jonathan Shires about progress at White Rose Office Park, since he first bought it 24 years ago for £38m.

Aspin explained how his business had taken the lead on plans to deliver a new railway station for the site. “The office park and the shopping centre are both in an area of deprivation, and the station will be an economic gift for this area,” he said. “A station will re-purpose this location and we can see it bringing many opportunities.”

He added the office park also intends to promote Leeds as a prime destination for technological innovation and entrepreneurship, explaining how it will establish a 7,000 sq ft space for start-up companies, with mentoring to be offered by Amazon.

Aspin said Leeds was succeeding, but could do even better with more collaboration and joined up thinking.

“We’re the most significant tech sector outside of London, with a great university and wonderful businesses that have been grown here – all of this has been achieved without a plan, it has just happened,” he said.

“We have fantastic fin tech and med tech sectors and a creative arts base. But we haven’t aggregated all of this. Trying to get everyone working together is really difficult.”

He said devolution was a key ingredient to make the region more successful and he also spoke in support of HS2 being extended to Leeds. But he conceded the “moment had passed” to establish an integrated mass transit system in Leeds.

“It is going to be very challenging to deal with,” he warned. “We don’t have a joined up concept for dealing with car use. Surely we should be breaking people out of their cars and reducing the amount of traffic in the city centre? But I don’t think anyone is focusing hard enough on solving the problem.”

 

 

 

Click here to sign up to receive our new South West business news...
Close