Leeds has long been perceived as lagging behind its North West rival Manchester in driving innovative public-private partnerships. But does its reputation match its record?
Local politicians and property leaders say the region has already upped its game, with the council helping to unlock major developments including Hammerson’s Victoria Gate shopping centre, Caddick’s £300m SOYO regeneration project and Muse Development’s 1.6m sq ft Logic Leeds industrial site.
“Coming out of the recession in 2008-09, we realised we needed to take a more agile approach,” says Leeds City Council’s director of city development, Martin Farrington.
“We needed to approach each problem differently and come up with innovative solutions and work closely with stakeholders and partners to bring forward bespoke solutions that work for everybody.”
Recent examples of where the council has used its powers to enable major schemes include releasing land on Sovereign Street to Muse for a new 60,000 sq ft office building now let to KPMG and working with Evans and Caddick to improve transport links between South Bank and the city centre to unlock the partners’ 700-home development at the former Hunslet Mill.
So why the bad reputation? “This side of the Pennines and also locally, we are quietly understated about our substance, and other places are massively overstated about their form,” says Roger Marsh, chair of the Leeds City Region Enterprise Partnership (LEP).
“Leeds is the kind of place where if you walk around saying ‘Ooh look at me’, you are going to get thumped pretty quickly,” adds Jonathan Shires, CBRE senior director, office agency.
“We have got to get out of that mindset and say ‘There is a really good story’ and tell people, because so many people’s perception of the city is frozen in time in an age that doesn’t exist anymore.”
Annual take-up in Leeds city centre is expect to reach a record total this year following the Government Property Unit’s 380,000 sq ft prelet at MEPC’s Wellington Place.
Even without that deal, the city would expect to exceed its five-year average of circa 580,000 sq ft, with around 670,000 sq ft of space let in 2017, according to CBRE.
Leeds City Region top attributes
- Yorkshire and Humber was the only region in the Northern Powerhouse to see an increase in its levels of investment, according to EY’s UK attractiveness survey 2017
- Leeds has the largest concentration of universities in the UK outside of London
- It has a burgeoning life sciences hub led by the University of Leeds’ Astbury centre for structural molecular biology
- Leeds has one of the most diverse economies of all of the UK’s major cities, with financial and business services accounting for 38% of total output, but other key sectors include retail, leisure, construction, manufacturing and the digital and creative industries
- According to Centre for Cities, Leeds had the fastest growing private sector in the UK during 2016, with more than 6% annual growth
- The region has 31% more under 25s and 21% more under 30s than Glasgow and Edinburgh combined
Despite the strong figures, the city has often failed to sell itself to major occupiers and the majority of take-up comes from sub-5,000 sq ft deals. The largest letting in H1 2017 was to Burberry, which took 46,058 sq ft at Rockspring’s No 6 Queen Street at a new headline rent of £30 per sq ft.
However, the city also lost out on a further £50m investment from Burberry after it abandoned plans for a factory at Temple Mill. It has also repeatedly lost out to Manchester on major north-shoring requirements including Amazon, Freshfields and the BBC.
“The city and city region have so much to offer, but I think sometimes we struggle to articulate the really important things for certain areas,” says Bruntwood director of Leeds, Craig Burrows. “We know we are lacking in certain areas, but we acknowledge it and there are plans to address it.”
Bruntwood’s Leeds portfolio is considerably smaller than in Manchester and its offices are designed to cater more for SMEs than large corporates, which it recognises are less easy to attract.
“We are probably pitching to businesses that have already bought into the city, but they are keen to grow within the city, and we are enabling that kind of growth journey,” adds Burrows, who is overseeing the delivery of Platform, a new city centre office development which includes Leeds Tech Hub, an incubator funded by the council.
One of the disadvantages faced by the city is that without a devolution deal or metro mayor, it lacks a figurehead to compete for funding and attention. For many major occupiers, the LEP will be its first interaction with the city.
The body was formed in 2011, replacing the abolished regional development agency as the local link between businesses and government. However, it only has around 60 staff members, around 15% of what the former RDA had, and the majority of staff come from public sector backgrounds, according to LEP chairman Marsh.
He says more devolved powers and funding would be welcome. “We are very competent, and we have got all the conditions,” he says. “We just need the lubricant and the lubricant comes as a devolved mayor, one accountable person with the appropriate structure underneath it.”
The region has access to a £400m Northern Powerhouse fund, but the cash comes with Whitehall restrictions which means it can only be spent on SME-related investments.
Without a figurehead, the industry would like to see the local authorities do more to support developments.
“Would one single person and political representative make a difference for Leeds and the Leeds city region?” says Michael Porter, senior director, valuations, at CBRE Leeds.
“Perhaps. But what we need is the wider political willingness to open arms to development, with the LEP to say ‘please come to Leeds, we are selling Leeds’. Manchester started earlier, that is all. We are now on the same trajectory, but we are just a few years later.”
“What they [the local authorities and LEP] can do is create the platform,” says Simon Marshall, joint chief executive, Scarborough International Properties, which is delivering Thorpe Park Leeds with Legal & General.
“So whether it is saying ‘We have got a potential investor coming to the city, can we bring them to see you and can you become part of the sales pitch’ whether that is council leaders or university vice chancellors, all of that side of things is an important part of it.
“But also it is with that engagement and just sitting around a table regularly with the decision-makers, because that is where you start to get some of the creative solutions.”
Solutions which other city councils are using include wrapping leases around speculative office development to get schemes off the ground. Once you secure one FTSE 100 company, others will follow.
“You slowly create momentum,” says Marshall. “But you also create this idea, which is what Manchester did very well, of ‘This is a really good forward-thinking local authority – if you go and talk to them, you can get things done.’”
As the debate around how best to formulate a devolution deal for the region continues (most recently with the One Yorkshire plan which was subsequently slapped down by the Department for Communities and Local Government), the local authorities and LEP claim they will continue to attract investment and unlock major developments regardless.
Significant upcoming public-private partnerships the council is bringing forward include the new HS2 station at Leeds, bringing Temple Mill back into use and creating a new gateway into the city at South Bank.
“Our approach is maybe recognising that we may be smaller in size, but bigger in influence,” says Farrington. “And that we have substantial resources to help facilitate the growth of Leeds.”
The city region is now focusing on winning the requirement from Channel 4 for a new base outside London, with all the local authorities teaming up to put together its most compelling case.
It may not get as much air time as its North West counterpart, but Leeds is quietly upping its game on collaboration and public-private sector partnerships.
Building a track record on public-private partnerships
Merrion House
Leeds council agreed to prelet 170,000 sq ft on a 25-year lease at Town Centre Securities’ Merrion House in 2014. Then the largest deal in the city centre in more than 20 years, it enabled the redevelopment of the building as part of a plan to consolidate 13 council offices into one building. TCS associate director Alistair Smith says the council has taken a forward-thinking approach to the scheme. “It is leading by example. It has not only invested in Leeds, but it has also invested in the property itself.”
Leeds United
In June, Leeds United owner Andrea Radrizzani completed a circa £20m deal to buy the club’s stadium from Teak Commercial. Much of the land around the stadium is owned by the council and the local authority is now working with the club owner on a three-year project, Elland Road 2020, with the aim of constructing a new training ground in the centre of Leeds.
Logic Leeds
In July, Leeds City Council agreed a deal with Muse Developments to forward-purchase three industrial units totalling 100,000 sq ft at its Logic Leeds site, which is located within the Leeds City Region Enterprise Zone. Muse said the deal will allow it to open up and invest in the rest of Logic Leeds, which is already home to retailers Amazon and John Lewis.
Headingley Stadium
The home of Yorkshire cricket club and Yorkshire rugby was secured earlier this year by the council with an injection of cash to secure a £35m redevelopment of the stadium. When funding was in doubt, the council negotiated the investment for the full redevelopment of the site from a private financial services company.
Leeds Victoria Gate
Hammerson’s £200m shopping centre was unlocked by the city council when it bought the former police headquarters adjacent to the scheme. The site has subsequently been turned into a car park and the deal was seen as key to securing John Lewis as an anchor tenant.
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