‘Tier one’ cities ‘under threat’

A LEADING property professional has warned that Leeds and Sheffield could lose their ‘tier one’ status but believes the market is beginning to see signs of recovery.

Guy Gilfilan, head of national property consultancy Lambert Smith Hampton in Yorkshire, said a lack of forthcoming development could mean the two Yorkshire cities lose out to other locations in terms of economic strength and inward investment.

He said a lack of supply of new office space would also be a major factor as cities wait for new developments to come through.

Mr Gilfilan said a natural consequence of the economic downturn would be fewer major cities, as seen from a property development perspective.

He said: “I think we’re going to see a smaller number of tier one cities. I think the start of the development cycle is going to be a lot slower in line with economic growth.

“The regeneration and development activity will be focused on a fewer number of locations. Both Yorkshire cities of Leeds and Sheffield are having to turn and focus on their profile and their wins because it’s going to be very important to secure those few economically significant property requirements that are out there.”

Mr Gilfilan said cities in Yorkshire also had to compete against larger areas such as Scotland that were continuing to benefit from the legacy of the now defunct regional development agencies.

He added: “The local enterprise partnerships are coming along massively but they’re really still not there in terms of their role in attracting inward investment.

“It’s quite a battle to make sure our cities are being properly presented to companies that are looking to boundary leap or set up an investment.”

Mr Gilfilan said that the “playing field” for development had to be different in cities such as Leeds and Sheffield from others in the UK in order to allow them to prosper.

He added that this could include changes to planning and also Yorkshire cities working together for the good of themselves and the region.

“The market is resilient but what would be really sad is if a major inward investment opportunity came up and we didn’t get a look in,” he said.

“The general development market is predicting an upturn in the near future. The market turns so much quicker than anybody believes. I believe we’re seeing the first part of that turn. It has to be followed up by the financial side of things.”

Mr Gilfilan added that schemes such as Sovereign Street in Leeds – which will see KPMG move into a new office building on the site – were the way forward.

The plan has seen Leeds City Council work with partners, including Muse Developments, to take the project forward.

“These deals have to be viable,” he added. “They have to pay the rate and that deal sets a new market rate.”