Construction in Leeds hits nine-year high

In another sign that the north is the place to be when it comes to development, construction activity in Leeds is on the up with more to come, according the latest crane survey of the city by Deloitte.

Construction activity in the city has hit a nine-year high after 16 new schemes got under way during 2015, according to the survey which reported sustained growth in all sectors. With investors it seems increasingly looking towards the regions to find better value for their money compared to London, Leeds is starting to consolidate its position in the northern marketplace.

The survey’s key findings show:

• 16 new schemes have started (above the average 12)
• Office construction is at its highest since 2007
• The highest number of new residential starts in nine years 
• Investor increases across all sectors
• Growth in residential development
• Consolidation of Leeds’s position in the northern marketplace

Of 14 new starts recorded in the survey, ten of which are new-build developments, compared with just three in 2013. These included the 202,000 sq ft Central Square development, and the latest phase of MEPC’s Wellington Place scheme.

Over 550,000 sq ft of office space is under construction in Leeds, an average of 99,000 sq ft per office scheme. This is three and a half times more than in 2013, fuelled, the survey says, by a growing tenant demand and rising developer confidence.

Angela Barnicle, director and head of real estate for Deloitte in Yorkshire, said: “Some commercial property developers continue to be cautious, but we expect to see sentiment strengthen further this year, and some of the previously-announced schemes in the city will start to take shape.”

Six office completions were recorded in 2014, delivering almost 215,000 sq ft, just over four times the amount completed in 2013, and above the 188,000 sq ft annual average for the first time since 2009. Office leasing activity in the city centre was also buoyant in 2014, with the final quarter seeing a 10 per cent uplift, bringing the annual total of let space to 540,000 sq ft – above the ten-year average but down on the record level of 2013.

Although 2014 was a strong year for commercial property schemes in Leeds, residential development continues to stall in the city centre market. Despite a stronger residential market in 2014, the Deloitte Crane Survey records no new developments and, with no construction starts, the pipeline remains flat. 

The survey also highlighted the importance of the city’s wider connectivity to drive future development. The long-awaited construction of the £17.4m Leeds Station Southern Entrance - which began in January 2014 - and the proposed £250m New Generation Transport trolleybus scheme are seen as key projects to drive connectivity.

“Infrastructure and connectivity are key to the success of any commercial market. If the proposals for improvements to the public transport network in Leeds are approved they will have a great impact on developer sentiment,” said Barnicle.

Download the Leeds Crane Survey here.