Opportunities Abound as Leeds Commercial Property Market Reports Record Numbers in 2018
The success of the commercial property market in Leeds has taken the country by a storm over the past 12 months and shows no signs of stopping in 2019. Businesses such as Asda and Capita have called this Yorkshire city home for years, and the decision is catching on. Channel 4 moved its offices to Leeds in early 2018, and HMRC chose to relocate the bulk of their business to the area this autumn. This success has not gone unnoticed: a recent feature in Property Week discussed the success of commercial property in Yorkshire, and took the time to consider the reasons behind the boom.
Leeds has received an incredible amount of investment in the past eighteen months. In the second quarter of 2018 alone, businesses and private individuals invested over £829 million of capital in Yorkshire, the highest level of investment outside of the capital.
Overseas investors are very active in the marketplace, led by those from the US, who are attracted by the price of assets and the good returns.
The office market has proven particularly popular with investors.
By April 2018, office investment had already exceeded £112 million, 12% above the 2017 total. Office take up is closing in on 700,000 square feet for 2018. However, as the city has become more popular, availability is at an all-time low at 1.2 million square feet. Top properties continue to let for £30 per square foot, and that number continues to rise as prime yields hold steady at 5%.
At Malcolm Hollis, we have helped many investors ascertain their best opportunities. We have carefully considered industrial estates and offices to determine best value, using our extensive knowledge and careful technical due diligence measures to assess the condition of the structures and identifying any red-flags pre-purchase, a prerequisite for achieving finance as most banks require a report. The value of these assessments is clear: many of the estates require a host of addons, from measured surveys and environmental surveys to reinstatement cost assessments. In 2018 alone, we were involved in the purchase and survey of St. Paul’s a deal with an estimated value of £25m, the £43m Morrison’s store in Sheffield, as well as the Boultbee Brooks Real Estate purchase. Scarborough Property Developments benefitted from our expertise in Daylight and Sunlight reports, and the business works with Kier Developments, a significant property developer in Yorkshire.
These companies are representative of a wider growth in Leeds and beyond. The cost of residential and commercial real estate is steadily rising in Yorkshire as well as the rest of the North, and Savills predicts that properties in the North of England will become more valuable than those in the South within the next five years.
We look forward to seeing the Yorkshire property market continue to prosper, and support growth and infrastructure wherever possible.