Since the economy started to turn around 2013, property developers have started to come back to the UK’s big regional cities, writes Richard Carr.
Property developer Richard Carr recently wrote about the rise in office rent seen in northern cities Manchester and Leeds and there is more good news for the cities as the FT reports that more than £1bn of property investment has been bumped into the cities over the summer.
In consecutive months during the summer of 2015, Leeds’ local economy was boosted by property investment. Heeton Holdings, a Singapore fund, made its first UK investment outside of London in the Yorkshire city.
In August, Insurance Group Legal & General, invested £162m in project to build a neighbourhood on the edge of the city.
Construction on the up
As a result of the aforementioned investment, 550,000 sq ft of office space was under construction in Leeds last year, more than three times the level of 2013 according to consultancy Deloitte.
Furthermore, the city’s first hotel since 2012 was built along with a new retail quarter in the city centre, which will have John Lewis as anchor tenant.
Angela Barnicle, head of Deloitte in Leeds, said the city “has a great talent pool and quality of life” but that it needs new high quality offices.
Lack of supply
Despite both an increase in investment and construction, the demand of office space in all the major northern cites continues to outstrip supply, as Richard Thornton of Jones Lang LaSalle explained: “Market demand is possibly higher than it has ever been. We have requirements for more than 500,000 sq ft on our books.”
Npower is attempting to find 275,000 sq ft of office space in Leeds, whilst 70% of the city’s big tenants have leases expiring over the next three years, which will add more pressure to the demand for new office space.