City skyline continues to develop, despite another year of uncertainty

The Leeds Crane Survey by Deloitte Real Estate, published today, shows how the skyline in Leeds continues to develop despite another difficult year.

Overall new starts remain the same compared with last year and the report shows the second highest quantum of office space delivered in the history of the survey.

Residential construction shows a sustained level of activity with four new starts and 12 schemes under construction.

However, the survey reports a slowing of construction in student accommodation with only one new start and no new starts in retail/leisure, education, healthcare. There is one new infrastructure start.

Following three years of above average delivery in the office sector, there was another strong performance in 2020, with the delivery of 667,059 sq ft of office floorspace.

The completion of the Majestic building, saw Channel 4 occupy a third of the building with its new headquarters.

And there were four new starts in the office sector, one more than the previous survey.

Two are new builds and two are refurbishments.  All the new start office developments are being delivered on a speculative basis with no pre-lets agreed.

Nolan Tucker, director at Deloitte Real Estate in Leeds, said: “The longer term impact on office space of COVID-19 and the increased ability for people to work from home is not yet known.

“However, last year, the Leeds Crane Survey predicted employers and tenants will move away from the traditional office models of floor space with banks of desks to a more flexible use of space.

“This transition has been accelerated and the new start office space under construction is being marketed as amenity rich, with wellbeing and community high on priorities.”

The four new residential starts in 2020 together will deliver 731 units.

In total there were 2,662 units under construction at the end of 2020 compared with 2,832 in 2019. There has also been the highest volume of residential completions since 2008.

All the new starts are located on sites where construction stalled after planning was granted and all are for new build developments which suggests confidence in the sector.

Three of the new starts are for Build to Rent and 69% of all new builds in the city are also for Build to Rent.

Tucker added: “Last year we predicted a shift in focus towards creating communities for city centre living.

“Several of the developments under way feature improved public realm, new green space and ground floor commercial use to create activity and vibrancy.

Nolan Tucker

“In future, more city centre developments may include different types of amenities like communal workspaces and indoor space to accommodate more people working from home.

“Residential developments are clustering in fringe locations and new neighbourhoods may emerge, potentially stimulating further demand for city centre living.”

For student accommodation there has only been one new start in the last two years and there are just 942 bed-spaces under construction. It follows record breaking years in both 2018 and 2019.

Deloitte suggests the slowdown could be attributed to record amounts of bed-space delivered in previous years, plus uncertainty due to COVID-19.

In the hospitality sector, there has also been one new start – the construction of the Citispace Hotel on Regent Street which will provide 54 beds.

Deloitte says this minimal activity is “not unsurprising” in a sector that has been brought to a virtual standstill, but adds it is expected this will see some recovery in 2021.

Finally, in retail there were no new building starts although some small scale commercial space was delivered on the ground floor of larger residential and commercial buildings.

The survey suggests the changing face of the high street could present an opportunity to diversify town centres and create high quality neighbourhoods.

Tucker concluded: “Leeds has shown incredible resilience during a challenging year for the city.

“New starts remain strong considering the economic environment and the market continues to respond to changing demands.”