Yorkshire & North East


The Yorkshire region is in good and growing health, leading the way in many respects. As the emphasis on the Northern Powerhouse grows and infrastructure links between the North’s major conurbations improve, we can only see this trend continuing.
 
Over the last decade, the strength of the Leeds economy has been driven by growth in finance and business services, which has been 9% higher than the national average. That trend is projected to continue over the next decade and Leeds is expected to sit behind only Birmingham in terms of the level of job increases within UK cities.


Retail leading the way

Retail development across the country has been in drought for over five years, but Yorkshire is bucking the trend in some style.

Last year saw the opening of only a few new retail schemes across the UK, but without doubt Leeds topped the charts with the long anticipated opening of Land Securities’ 1m sq ft Trinity shopping centre. This has redrawn the retailing patterns in the city centre, but more importantly, it stands as a national exemplar of how city centre retail development should be executed to tap into the consumer habits of modern Britain. Mixing great shops and leisure outlets seamlessly together in a cleverly and attractively designed environment means that the Leeds catchment can shop, eat and drink to their hearts’ content bringing a new vibrancy to the city centre. The scheme boasts an innovative 20,000 sq ft food concept in Trinity Kitchen and the only Everyman Cinema outside London.

Not content to stop there, the diggers and cranes are now at work elsewhere in Leeds city centre. Hard on the heels of Trinity, Hammerson started construction on the £650m, 1.1m sq ft Victoria Gate in 2014, which will house the city’s first John Lewis department store alongside a range of top line shops, cafes and leisure uses. As retailing patterns in the city continue to evolve, a number of other high profile large space deals will follow with us advising on two of the largest potential changes.
 
It could be argued that having been the latecomer to the party in terms of retailing in regional cities, Leeds is now competing hard to become the premier retail destination in the North of England.

The wider Yorkshire region is also seeing a significantly above average amount of retail development. Easter 2014 saw the opening of Oakgate’s Vangarde Shopping Park in York, the UK’s largest recent out-of-town project at 330,000 sq ft. It is particularly interesting as it gives indicators for the future formats of its main retailers – John Lewis, Marks & Spencer and Next.

To the great relief of the local populace, the long and troublesome saga of Westfield Bradford is at last resolved with the scheme now on-site. Having funded the project with Meyer Bergman, the £260m Debenhams anchored scheme is now due to open in 2015.

The news is not all good however, with the Seven Stones project in Sheffield and the Barnsley Markets scheme so far failing to really emerge from the ashes of the recession, but both have the right fundamentals to succeed in time. City centre development is all about the long game.


Offices in demand

On the back of a record year in 2013 for central Leeds office take up (800,000 sq ft), 2014 also looks like being ahead of the long term average take-up level. Incentives required have reduced by almost 50% within the past 18 months and grade A vacancy levels have plummeted from over 30% in 2009 to under 6% – the lowest level outside central London.

This shortage of stock has prompted huge anticipation of schemes to come, but speculative development in Leeds remains limited. Blue-chip occupiers have to compete for limited pre-commitment opportunities to satisfy their requirements. Squire Patton Boggs has become the first to commit to MEPC’s 6 Wellington Place, taking 32,000 sq ft of the 104,000 sq ft building due to complete by the end of 2015. PwC is expected to take 50,000 sq ft at Roydhouse Properties’ M&G Funded 210,000 sq ft development at Central Square, and Bruntwood/Kier are close to securing their second occupier for their 90,000 sq ft 3 Sovereign Square development due to complete in Q3 2016. We expect supply shortages to persist into 2016/17, and for rental pressure to build, pushing prime rents close to £30 psf during 2016.


Developing mixed-use

On the edge of the city core, further development will also take off in the near future as sites come to the market and people begin to “jockey for position” to take advantage of HS2, when it rolls into town. Caddick Group has acquired the 9.5 acre City One site on Sweet Street for a mixed-use scheme including an element of Private Rented Sector (PRS) residential space. Further developments are expected to be announced within Holbeck Urban Village at sites to include Temple Works, Tower Works and Granary Wharf.

CONTACT

Greg Styles
Head of Retail Development & Leeds Office
Direct: +44 113 200 1818
Mobile: +44 7795 010200 
greg.styles@colliers.com

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