With 2m sq ft of retail space set to hit the Leeds market by 2013, developer Propinvest is moving fast to complete its scheme.
The battle for Leeds’ shoppers is on. Propinvest, the force behind the redevelopment of the Headrow shopping centre in Leeds, has been the first to stick its head above the parapet. In late July, it got consent to overhaul the 275,000 sq ft centre, which is to be renamed The Core.
Since then, it has been boasting that it will finish the project 12 months before other major schemes in the city. This is significant, as around 2m sq ft of new and refurbished space is set to hit the Leeds market by 2013 (see timeline). When developers start racing each other to the finish line, it is probably time to take a long hard look at the implications of the figures.
Jonathan de Mello, director of Experian’s property consultancy, says that space in the pipeline is unlikely to increase the city’s catchment, especially when retail regeneration plans in Wakefield and Bradford are taken into account.
“Shoppers from these areas would have got pulled into Leeds,” he says. “However, if these towns are fighting back, any development in Leeds is not going to result in an increase in spend.”
As a result, de Mello says that being both first on the ground and established will become hugely important. “The scheme that lags behind is not going to be successful,” he says. “If Propinvest is moving its scheme forward, and others follow, then Hammerson’s and Town Centre Securities’ Eastgate Quarter will have a huge problem.”
Leeds already has a reasonable selection of respectable traders, such as Zara and H&M. “Some of these will double up, but not all, and this will affect the established areas,” says de Mello. In addition, retailers, swamped by developer attention across the UK, are becoming more picky about decamping from successful stores to new, untested areas.
Few other cities are contemplating this level of development, he says. Pointing to Liverpool, Stratford in east London and Glasgow, he says: “They are at a similar level to Leeds, but they are bigger cities. In addition, they are operating on different catchment models. They are near residential and they are not competing exclusively with the city centre.”
In terms of scale, the Headrow will do little to worry the big-name developers behind the likes of the Eastgate and Harewood Quarter, which will have 1.2m sq ft of retail. And, as far back as May, EG announced that Land Securities and Caddick were to deliver 1m sq ft of space in the city centre, in a project that will be called Trinity Leeds.
Modern retailers
Rob Hancox, assistant director at Hammerson, remains bemused by Propinvest’s statement.
“We’ve genuinely never viewed the Headrow as competition. It is about fixing broken bits of space in the city. We are a wholescale regeneration,” he says.
In terms of space, Hancox says that, while 2m sq ft of space is about to hit the market, only 1.2m sq ft is new. As a result, he remains “remarkably laid back” about the prospect of letting this amount of space.
Hammerson received formal outline planning permission in August. It will appoint architects and the CPO inquiry will start this month.
Timeline
2008 Capital & Counties Broad Gate on the Headrow totalling 120,000 sq ft, plus 150,000 sq ft of offices
2009 Propinvest’s Headrow centre three-storey extension
2010 Land Securities’ and Caddick’s Trinity Leeds
Combination of Leeds Shopping Plaza and Trinity Quarter, 1m sq ft
2013 Hammerson’s and Town Centre Securities’ Eastgate and Harewood Quarter, 1.2m sq ft of retail space, plus 1,000 homes and 300,000 sq ft commercial space
Offices
A lack of stock is behind Lambert Smith Hampton’s positive outlook for the Yorkshire market. It predicts that, by the end of the year, rents will have grown by 4% in Leeds and 4.8% in Sheffield. However, this contrasts with a predicted national office rental growth of 8.4%.
Industrial
Industrial demand in Leeds is being driven by distribution, boosted by the growth of internet shopping, says Robert Whatmuff, head of industrial at LSH’s Leeds office. “Gazeley, ProLogis and Goodman are all speculatively planning around 11m sq ft,” he says, but warns: “The removal of business rate relief on empty properties will have an impact and could threaten schemes getting off the ground.” A rental high of £6 per sq ft should be achieved for units in the 10,000-20,000 sq ft bracket.
Retail
Neither Leeds nor Sheffield is predicted to see growth in the coming year, LSH says. This is against a national slowing in rental growth to around 2% this year.
