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Bilfinger GVA forecasts strong future for Yorkshire property market

Thursday, 04 February 2016

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2016 is shaping up to be a positive year for the commercial property market as the Northern Powerhouse agenda continues to build momentum, experts from Bilfinger GVA told an audience of senior Yorkshire business leaders.

At a breakfast seminar, held at Aspire in Leeds city centre and attended by more than 100 people, the team from Bilfinger GVA’s Leeds office reflected on key growth areas for the commercial property market – industrial, office, retail and investment – looking at performance over 2015 and projections for the coming year.

Sector specialists gave a bullish perspective for the Yorkshire commercial property market, with Leeds set to match bigger cities, such as Manchester and Birmingham, as the Northern Powerhouse agenda moves forward.

Although nationally growth slowed in 2015, there is much confidence in the year ahead. With the UK economy now back to pre-recession levels and jobs set to grow, Leeds and the surrounding towns and cities of Yorkshire will continue to be seen as good investment opportunities.

  • The Northern Powerhouse
  • Ben Hall, Regional Senior Director at Bilfinger GVA, said: “The Northern Powerhouse is providing the opportunity for key northern cities, like Leeds, Manchester and Sheffield to collaborate. We now have one voice and this, combined with stronger markets all round, is helping to move the agenda forward.”

  • Industrial
  • Iain McPhail, Associate, Industrial at Bilfinger GVA said: “In the industrial sector we are seeing headline rents increasing for the first time in 15 years as a direct result of regional market conditions.

    “The market has continued to perform well in 2015, with several key transactions completing recently including one of the largest lettings of the year involving Bibby Distribution taking IDI Gazeley’s 281,000 sq ft G Park unit at Wakefield Europort.

    “Internet and discounter retailers, as well as the third party logistics sectors are driving the big box market. Continued occupational demand and the gradual take up of existing stock over the last few years has led to a shortage of grade A prime distribution units available above 100,000 sq ft.

    “This in turn has resulted in an increase in design and build activity, as occupiers have struggled to identify properties that suit their exact requirements. 2015 saw two major retailers Poundworld and TK Maxx sign up to bespoke buildings along the M62 corridor taking space of 524,000 sq ft and 635,000 sq ft respectively.

    “Along with rising rental values, we are also seeing incentives packages returning to pre-2008 levels. A strong 2015 take up performance, coupled with the current market conditions, increased developer confidence and a rising rental market may be the catalyst towards further speculative development during the next 12 months.”

  • Offices

  • Matthew Tootell, Director, Offices at Bilfinger GVA said: “The office market in Leeds city centre is another positive story with the region performing significantly above national trend levels.

    “Stand outs deals include Sky taking two lettings of 60,500 sq ft and 36,500 sq ft at Leeds Dock. Of the four schemes (totalling 450,000 sq ft) in the city centre due to complete this year, almost a third of the space is now let.

    “Supply of brand-new prime space remains tight however there are a number of refurbishments underway, looking to satisfy the large number of requirements in the city. There is significant opportunity to raise rental value to £28 / £29 sq ft and bring Leeds to the same levels as cities such as Manchester and Birmingham.”

  • Retail
  • “There’s no denying that the city has had a fantastic year in terms of retail,” said Richard Padley, Director, Retail at Bilfinger GVA. “With the continued success of Trinity Leeds, a number of high profile names signing up to the long awaited Victoria Gate development, due to open October this year, and some high profile new lettings on Briggate, Lands Lane and Commercial Street, it really is a positive story for the city.

    “Elsewhere in the region, the new Broadway Shopping centre in Bradford finally opened in November last year to huge success, securing some great names such as M&S, Superdry, H&M, River Island to name a few. There are also lots of other positive new retail and leisure development proposals throughout the region in Sheffield, Barnsley, Halifax, Huddersfield and others.

    “It is still tough for occupiers and everything is still price driven but we believe the retail market in our region is in a good place with an extremely positive outlook moving forward.”

  • Investment
  • “There is a large amount of capital allocated to be invested in the regional property market, but we are not currently seeing investors under a huge amount of pressure to deploy the equity. That, coupled with landlords who are under no pressure to sell, could lead to a steady period in the transactional market. However, it is early in the year and inflows of money and buying strategy may change to accelerate liquidity,” Ben Hall, Regional Senior Director at Bilfinger GVA commented.

    For further information, please contact Ben Hall, Regional Senior Director on ben.hall@gva.co.uk or 0113 280 8064.