2013 was an eventful year for Yorkshire's commercial property market, with a significant rise in the number of transactions across both the office and industrial sectors compared to 2012. While Leeds remained the focal point, activity is gradually filtering out across the region. So what's in store for 2014?
Lack of speculative development could be a brake on further growth
With The Mint, Broadgate, and No 1 Leeds all virtually let to capacity, there is less than 200,000 sq ft of Grade A office stock available in Leeds city centre. Supply levels are at a 10-year low with significant speculative development now needed to drive the market forward over the next 12 months.
The upcoming demolition of the former Yorkshire Post offices could create some much needed new office space, but it unclear if a new scheme will come to fruition without a confirmed pre-let tenant. This is indicative of the cautious market and, although there is real opportunity for investors, funding for speculative development is difficult to achieve. It is unlikely that we will see many spades in the ground without pre-lets secured.
Outside Leeds city centre, speculative office development activity is hotting up, with another phase of office buildings at Calder Park, Wakefield, set to complete in early 2014. The College of Law is also rumoured to be looking for new office space but, with only two or three viable options to consider, this could translate into a new scheme being developed.
Demand for large-scale distribution hubs set to continue
Industrial transactions double that On the industrial side, the small and mid-box market is still suffering from an undersupply of Grade A space, which has stifled take-up, but demand for large-scale distribution hubs has remained strong. Along with the 647,000 sq ft deal to Marks and Spencer at Sheffield International Rail Freight Terminal, lettings or sales of over 3.3 million sq ft of space (units over 100,000 sq ft) were agreed in 2013, close double that of 2012. [Need a prediction here]
Another bumper year for the Retail & Leisure sector
Yorkshire’s retail and leisure offering continued to develop in leaps and bounds, with the opening of Land Securities’ Trinity scheme in spring 2013 bringing thousands of additional shoppers and tourists to Leeds. Land Securities applied for planning permission for a proposed major extension to its White Rose Shopping Centre, with plans including four new restaurants, extending existing anchor stores and a new 12 screen cinema. The First Direct Arena was also completed in 2013 and will host Le Grand Depart for the Tour De France, helping to put Yorkshire on the map to a global audience.
In 2014, we should see Hammerson on site at Victoria Gate, further strengthening Leeds’ retail offer while over in Sheffield, plans for the re engineered Sevenstone retail development should be unveiled in spring.
Over in York, construction of the John Lewis, Marks and Spencer, and Next retail stores on the Vangarde site at Monks Cross continues apace. The 339,000 sq ft retail park is scheduled to open in April 2014 and will include a number of national restaurant chains.
Improved access to finance could lead to increased investor appetite
Following these notable developments in the region, as the economy shows the most significant signs of recovery since 2008, access to finance should improve and with it the number of new development starts, particularly in the office and industrial sectors. With luck, investor appetite in the regions will continue and 2014 will be another solid year for the Yorkshire property market.