NEW TRANSPORT INFRASTRUCTURE WILL BE KEY TO GROWTH FOR UK REGIONS
NEW TRANSPORT INFRASTRUCTURE WILL BE KEY TO GROWTH FOR UK REGIONS, SAYS CBRE
- New Victoria Gate Development to Bring £82M investment to Leeds
- Manchester and Birmingham top property investment outside London
- 2 million sq ft of office space has been developed in UK regions
- Devolution likely to be a strong impetus for economic growth
Leeds, November 8 2017 – Cities which implement careful strategic planning and budgeting and actively reflect the potential for private finance and investment of infrastructure as the economy grows, will be the UK’s most successful regions. This is one of the findings revealed in global real estate advisor CBRE’s Core Cities 2nd edition report, which examines the property market opportunities in the UK’s main cities outside London, including Leeds.
High levels of accessibility will help specialisation, which is a key contributor to the provision of higher-order services agglomeration and clustering, allowing related services to support each other and drive innovation through collaboration. It will also allow for access to suppliers and customers. These increased connections will ultimately deliver more growth.
The status and size of the core city airports is also likely to become a key battleground for these cities, as air travel and international business grows. Brexit might well make international connections beyond and to the EU even more important.
Figures from the report reveal that property investment outside London saw a solid start to 2017. Since 2004 Manchester and Birmingham have taken the lion’s share of investment, though cities like Leeds, Edinburgh and Bristol perform better on a population-weighted basis. Investment in the regions has been healthy since the recovery from the financial crisis of 2008. Investment volumes increased up to pre-crash levels in 2014, and are set to have a healthy 2017 after a strong start to the year.
The development scene in regional cities has been extremely active and 2017 is likely to be the most significant year in the office development market since 2009. The quality of space is consistently improving, as occupier demand increases.
The six biggest city office markets outside London all look set to perform well with an average 3.4% growth anticipated by 2022, equating to an extra 41,000 office based jobs. Of these 41,000 new jobs, Greater Manchester is expected to account for 15,800, followed by Leeds with 6,600.
However, the volume of new starts on office space has slowed over the past year, resulting in a tail-off in expected completions in 2018 and 2019. While the availability of Grade A space in many regional cities has remained in steady balance, with the delivery of new space reasonably well aligned to occupier demand, the concern now is that Grade A choice may once again be more limited in some locations. This is particularly an issue for those cities where new development commenced earlier in the cycle, for example Bristol, Glasgow and Manchester.
The retail market in the UK is still one of the most attractive in the world. Two recent CBRE reports place the UK in the top three indicators of retailers’ interest in expansion. Victoria Gate in Leeds, a new £165m development by Hammerson, offers an even 50:50 split of retail to dining. It has been estimated that over the next ten years this centre will attract more than £82m worth of investment into the city. The mix of luxury retail, coffee shops, evening dining and a casino add a different element to a city that has already seen a boost in retail from the opening of Trinity shopping centre.
Retail and leisure remains an integral part of the offer to residents and visitors to cities. As Leeds has already demonstrated, a focus on high quality design, a diverse mix of good retailers and a high ratio of food and beverage provision versus traditional retail, can have a significant impact on city centres.
The UK regions are looking stronger than ever, with high levels of investment, active development and a wide variety of planned infrastructure. 2018 will be a year for regional mayors to really prove their worth. They have the ability to develop a powerful and (literally) single minded vision about the place they want their city to become. However, the power and deliverability of that vision will depend on the political clout that city leaders can muster at the ballot box
A number of major new retail, leisure and office schemes have contributed to the significant development success in Leeds over the past 5 years, which has transformed into a fantastic and thriving city to live, work and play. The city can only go from strength to strength, supported by the planned future investment in its transport infrastructure and in particular the redevelopment of Leeds City Station. It’s also regarded as one of the largest financial districts outside London and we anticipate Leeds will be attractive to key sectors such as technology and media and we’ll see major growth in these areas.
Grade A office stock is becoming limited with circa 500,000 sq ft available, which based on historic figures is around two years take up. However, it is encouraging to see other major sites such as CEG’s, South Bank mobilising to accommodate future demand and investment in the city