With a supply crisis looming, Leeds players want to see actions, not visions.
“Leeds, live it, love it!” is the slogan of the Leeds Initiative, the latest vision for the city to be announced by the council after two years of consultation. The problem is, many in the property industry do not seem to be loving it. In fact, most seem downright fed up of it.
The actual details of this initiative aside, “vision” is a word that many in Leeds have come to hate hearing. Few wish to go on record, but the problem is that, while there are numerous visions, initiatives and proposals, very few schemes are getting off the ground.
Although there is a development pipeline packed with proposals, Leeds is facing a chronic office supply shortage. In a market with an average 500,000 sq ft of take-up a year, there is only 270,000 sq ft available. No space is set to come onto the market until late next year.
Property players are blaming the council for delays in planning and a lack of clarity over the city’s long-term development prospects.
“How much navel-gazing can one city take?” asks one, adding: “We need leadership that says exactly what it wants in clear business language. And we need an environment hospitable to inward investors – not more visions.”
Drivers Jonas’ Q2 crane survey highlights the problem. This year, of 400,000 sq ft of schemes completed or in the pipeline, 64% has been let or sold. More than 1m sq ft sits in the pipeline, its timeline yet to be determined. Of the office schemes, Stanley House at Clarence Dock is the only new scheme on the map.
“When is someone going to do a Spinningfields in Leeds?” asks John Weir, partner in charge of Drivers Jonas in Leeds, pointing to Allied London’s Manchester scheme. “The West Leeds District Partnership will redevelop that area, but at what rate is that going to come forward?”
Weir has first-hand knowledge of Leeds’ supply shortage, having just opened Drivers Jonas’s office in the city. During his search, he looked at 15 offices and found “there was a serious paucity of choice”.
Bridgewater Place had helped fill a gap but the 235,000 sq ft of offices in the scheme is all but fully let. Weir points to the scheme as “a brilliant example” of what should be done.
“Everyone with a requirement has gone to have a look, but where is the next one?” he asks. “It is waiting for its neighbours, and it looks a bit naked at the moment. We need more to complement it.”
Office scheme
The lack of supply has caused rents to stagnate at the £25 per sq ft set by King Sturge and GVA Grimley at City Point in 2005. This compares badly with Manchester and Birmingham, at £30 per sq ft.
Richard Thornton, partner at King Sturge, believes planning is part of the problem. He points to McAleer & Rush’s 150,000 sq ft office scheme at City Square. “If they had detailed planning, I am sure they would have pressed the button by now, but it’s the case – as it is throughout the UK – that the council has a lack of employees.”
The proposed Criterion Place, with its two “kissing towers”, is another example of a delayed scheme. The project has been inactive for so long that it has simply dropped off many development lists. Yet agents say it is arguably the best site in Leeds.
Leeds council picked Simons Estates, to develop the 800,000 sq ft mixed-use scheme in October 2004.
No strangers to the local market, Simons Estates has proposed, built and let 2 City Walk since then. It says a start will be made on Criterion Place in the autumn, and has scheduled completion for 2010. Agents, frustrated at the lack of action so far, are not holding their breath.
The council says progress is being made. In a written statement, it says contracts have been exchanged on a conditional basis and it expects a planning application to be submitted in March.
Defending the time taken to decide planning applications, it says: “Certainly, quality is an issue when it comes to large-scale development. We are looking to take things up a league and will not simply accept development for development’s sake.”
Once a planning application is received, the council aims to comply with government targets and make a decision within 13 weeks.
It points to a number of major developments on site and under way that are expected to be completed by early 2009, including Latitude and Broad Gate (the former Allders building). It is encouraging development in the south and says by the end of 2008 there will be a total of 680,000 sq ft of offices at Holbeck Urban Village. The council also wants to see more tall buildings and says there is a “running total” of 22 tall buildings proposed.
Jeff Pearey, head of Jones Lang LaSalle’s Leeds office, says: “While most of the occupiers are indigenous, they are national or multinational companies which look at buildings not just across the UK but across the world. We need to provide more ‘wow’ buildings.”
Pearey points to the development corridor down the Whitehall road. “It is incredibly important to our future. It is the most deliverable platform and is fundamental to the health of the office market.”
Developers need to shoulder some of the blame for shortages. By not being brave enough, they have become part of the problem. Privately, some agents whisper that many developers may have taken a look at MEPC/Hermes’ Wellington Place development and asked why No 2 Wellington Place, completed last year, has stood empty for so long.
MEPC chief executive Rick de Blaby says deals for up to four floors are in solicitors’ hands, leaving just one-and-a-half floors left to let. By the end of the year, he hopes the development will be fully let.
As a result, he says, MEPC will push on with plot 3 this year, building a 120,000 sq ft speculative office building and 60 flats. A reserved matters application will be made this month, with a view to being on site by the end of the year.
De Blaby remains bullish. On rents, he says the market has simply not been tested. On the length of time it took to let No 2 Wellington Place, he says: “I’m not especially worried. We are opening up the river frontage and adding a new square. The buildings here will be a very different proposition.”
Actions, however, speak louder than words. And, until Leeds gets some developer action, property players will not be counting the cranes.
