Property investor confident in regional office market
Palace Capital, the developer behind the Hudson Quarter development in York – which includes the first grade A speculative scheme in the city for a decade, believes regional offices will be attractive post Covid.
The firm which converted to a real estate investment trust (REIT) in August, has stated in its annual report, that it believes investments in the region will prove fruitful in the wake of Covid-19.
In particular talking about the office market, which accounts for 46% of its portfolio, Neil Sinclair, chief executive explained how Covid-19 might impact the market:
“We believe that companies will now examine whether they need to lease expensive offices, or as much office space, in and around London. Prior to Covid-19, several companies had already relocated out of London including Talk Talk (Salford), Burberry (Leeds), Channel 4 (Leeds) and Hiscox (York).
“We currently have office space available in Milton Keynes and Leeds. In the current climate our view is that companies and the public sector will be very cost conscious, therefore we are reasonably confident that a sizeable proportion of our office vacancy will be let during this financial year.”
However, despite this view and progress continuing to be made on its flagship Hudson Quarter development – including legal and professional services business, Knights, taking 4,500 sq ft at a record rent for the city of £25 per sq ft, and over a quarter of the apartments at the development sold – the firms portfolio valuation has dropped to £286.3m, with this figure including the still under construction York site.
Looking to the future Sinclair added that the firm would not be increasing its portfolio until “we see where the economy may be heading”.
Stanley Davis, chairman of Palace Capital added: “We believe there will be opportunities to deploy capital in the latter part of the year.”
Alongside the Hudson Quarter, Palace Capital also owns Bank House in Leeds which is let to the Bank of England, the Broad Street Plaza leisure development in Halifax, as well as other developments in York and Sheffield.