Residential demand drives record construction activity in the city

The level of construction activity in Leeds over 2021 was at a record high driven by growing demand in the residential sector, according to the latest Regional Crane Survey by Deloitte.

The year saw a total of 22 new starts marking a 15-year high for the city which last saw levels above this in 2006. It also marked the highest level of residential construction since the survey began, with 2,267 new homes starting on site and a further 4,192 already under construction.

Cllr James Lewis

The annual survey is seen as a barometer of developer sentiment and future supply, with the leader of Leeds City Council, Councillor James Lewis, noting these latest record breaking figures alongside the “scale and breadth of investment” over recent years, demonstrated “continued resilience and confidence” in the city.

He added: “Investors share in Leeds’ vision of a greener and connected environment” and that the high levels of investment in ‘place’ from the council along with infrastructure projects such as the proposed mass transit scheme were “proving a magnet for our city” with even more of the UK’s leading businesses now choosing Leeds to share its ambitions and play a part in its inclusive growth.

The rise in residential projects new starts, which the report said jumped 210% when compared to 2020, was described as backing the council leader’s view and demonstrating both market confidence and appetite for the city.

Nolan Tucker, director in real estate at Deloitte in Leeds, said: “Leeds has gained significant traction in new build to rent projects. This is likely driven by city centres in recent years investing more in ‘placemaking’ – looking to create quality accommodation that is mixed-tenure, sustainable, includes more green space, and with a focus on community. This will also continue to attract the best talent to regional city centres.”

The office market, which will face a significant change in leasing structure according to one developer, also saw an increase in new starts, however only 82,389 sq ft of new office space was delivered.

In contrast to the office market delivery, educational floor space blossomed last year with the highest levels of completed development in the history of the survey – 465,958 sq ft, highlighting the importance of the city’s education institutions on the property sector.

However, despite this strong delivery no new starts have been recorded from the sector for the last two years.

Tucker noted that despite the record year “the pipeline for next year is currently limited”, which he attributed to “market uncertainty following the pandemic” and a bumper period of construction activity from the sector.

He added: “However activity by higher education and research institutions is expected to grow over the coming years as plans associated with the Leeds Innovation District develop. This will continue to attract talent to the city centre.”

The education sector did fuel growth within student accommodation with six new starts recorded, described as a response to the continued uplift in student numbers in the city.

The retail, leisure and hotel sector which has been hard hit by the pandemic, saw a subdued 2021 with no retail or leisure new starts and nothing other than small-scale retail commercial spaces on the ground floors of larger mixed-use schemes delivered. There was however one hotel new start – the refurbishment of the Queen’s Hotel, which completed in the third quarter of 2021.

The future pipeline within the sector is expected to increase, as it rebuilds post-pandemic with the survey noting the possibility of three new hotel developments including The Wesley Hotel, 17 Wellington Street and George Street, which could provide 268 new rooms.

Stuart Cottee, practice senior partner at Deloitte in Yorkshire and the North East, said: “It’s really encouraging to see Leeds observing a record-breaking year in construction activity. The city continues to show resilience despite the continuing challenges of the pandemic and wider supply chain disruption. As restrictions continue to lift and uncertainty wanes, Leeds is gearing up for a good pipeline of development, particularly in the residential sector, pointing to continued confidence in the city centre.”