Despite the wider UK economic uncertainties and of course the unknowns of Brexit, the commercial property market in Yorkshire is holding up well and showing plenty of the resilience the region is famed for.
The industrial market in particular is very active, with increasing numbers of businesses looking to expand outside city areas into the many industrial parks that have sprung up in recent years. In the latest RICS commercial property market survey covering Q3 of this year, surveyors were positive about Yorkshire with one observing that there are “no signs of pre-Brexit jitters”, adding however that “we need more stock to enable occupiers to fulfil their expansion plans”. The demand for good commercial space is high.
Turning to the focal point of the regional economy, Leeds, the city is home to many major development schemes. A report from Leeds city council published in 2017 highlighted that there had been £3.9bn of development schemes completed in the city over the previous ten years – with a further £7bn in the pipeline. You only need to look at the number of cranes against the skyline to see that this activity is still forging ahead.
The blot on the landscape, however, is retail. The national malaise affecting the High Street applies in Yorkshire as much as anywhere else. Many city centre shopping centres are struggling to attract business. Some areas with a relatively wealthy demographic, such as Harrogate, may be continuing to attract footfall, but other cities in the region are undoubtedly finding the going tougher. Retail property values are struggling to hold up and funds have begun to exit the sector in favour of office and industrial.
The Chancellor’s Budget recently included measures to help the High Street, with £900m in business rates relief for small businesses, a £675m ‘future high streets fund’ for the transformation of high streets and potential changes to planning rules to allow shops to be converted in homes and offices. How far these measures will go, in Yorkshire and nationally, to support the retail sector and stimulate demand for space only time will tell.
One of the great factors supporting the resilience of the Yorkshire market is the attractiveness of the region as a place to live and work. The population of Leeds, for example, is projected to grow from 779,000 in 2016 to 826,000 in 2026 – an increase of 6%. The popularity of the region as a place to live means that it will also remain a good place to do business, underpinning both the residential and commercial markets. This will be further bolstered when HS2 eventually comes on line, increasing and improving connectivity.
The recent decision of Channel 4 to make Leeds its new national headquarters was further proof of the attractiveness of our region and a great shot in the arm for the city. It will have a ripple effect across the local economy.
Lenders remain active in the market, willing to lend against good residential and commercial developments.
With a growing population, improving infrastructure and funding available, the region’s property market looks set to continue to offer attractive opportunities for both developers and occupiers.
Lyndon Campbell and Deborah Powell, Property Partners at law firm Bevan Brittan