The Future of Leeds City Region

The Future of Leeds City Region
 
Supporting growth

10 November 2016, by Emily Williams

Economic growth and investment in infrastructure is leading to new development opportunities

 

The city region is continuing to attract investment and is expected to see economic growth of an impressive 8.8% over the next five years. This is leading to new development opportunities across all sectors.

Industrial and logistics

Beyond Leeds city centre, growth will initially be driven by industrial, logistics and manufacturing. The Leeds and wider Yorkshire industrial market is suffering from a massive supply demand imbalance. Take-up averages 2.8m sq ft a year, and prime rents have increased from £5 to £5.75 per sq ft in two years, and are forecast to rise by a further 5.5% by 2020.

For decades the available stock has been dated, with occupiers having to settle for either secondary buildings or secondary locations.

The City Region Local Enterprise Partnership is encouraging investment in these sectors through Enterprise Zones. The Leeds Enterprise Zone, which has good links to the M1, has already seen completion of over 480,000 sq ft of commercial space and has long-term capacity for over 4.5 million sq ft of employment space.

Nine sites have been allocated for development in the M62 Corridor Enterprise Zone covering 103 hectares across Bradford, Kirklees, Wakefield and Calderdale.

Office requirements in key locations

Outside Leeds, the office market is quieter. Prime office rents range from £14.50 per sq ft in Harrogate to £16.50 per sq ft in York and Wakefield, and the demand for new supply has been largely met by the existing pipeline, such as the conversion of Dean Clough Mills in Halifax, which is now home to over 100 companies and has recently seen Covéa Insurance complete its relocation, taking 75,000 sq ft of space.

There is, however, an undersupply of Grade A office space in key locations, with Hiscox recently choosing to develop their own site in York, rather than take existing office space.

In York and Harrogate, strong residential capital values have also made it viable for landlords and developers to convert tired office stock into residential units rather than refurbish. Office to residential conversion has played a valuable role in supporting housing delivery in these areas. For example, in 2015, 36% of new housing stock in Harrogate was delivered via change of use.

Residential demand

The recovering economy has led to a growth in residential demand. There is a large shortfall in the delivery of new homes across the region. Housebuilding was damaged by the 2008 recession, and although delivery has steadily increased since 2012, demand still outstrips supply.

The region needs over 90,000 units to be delivered by 2021. However, we have identified only 60,000 residential units currently in the development pipeline (16,500 under construction, 19,100 permitted, 24,400 under application).

Four local authorities in the region, Barnsley, Bradford, Kirklees and Leeds, cannot demonstrate a five-year housing land supply. This problem is exacerbated by the greenbelt which constrains the number of sites able to come forward, and the cost of developing out major regeneration schemes, which raises viability issues in weaker markets. Although house prices across the region have seen growth, it is still not sufficient to support the development of more complex sites.

FIGURE 3

Residential units in the immediate planning pipeline

 
Figure 3

Source: DCLG, Local Authority SHMAs

Housing hotspots

Some locations are emerging as likely hotspots for future residential development, as it has been recognised by multiple local authorities that major residential sites need to be brought forward.

Wakefield is well positioned to absorb the overspill of demand from other areas in the region, thanks to its accessibility and availability of land for housing development, including major developments at Snowhill and Wakefield East.

In Kirklees, Dewsbury Riverside has been allocated over 2,500 units in the Draft Local Plan, while in the north of the region, new settlements of over 3,000 units are proposed at Whinthorpe, Clifton Moor and Harrogate Council is currently consulting where the new major settlement will be.

It is essential that local authorities across the region work together to meet the demands of the growing economy through the delivery of infrastructure for these development projects. An absence of suitable homes could easily restrict growth if lack of supply or affordability problems prevent people from moving to the City Region.


Development Hotspots

New infrastructure leading to new opportunities

New sites will be opened up across the region as a result of infrastructure improvements. This is already happening at Kirkstall Forge, where a new station opened this year has enabled the development of 400,000 sq ft of commercial space and over 1,000 new homes. Three options are also currently being considered for a new airport link road, which will open up sites around Rawdon, Yeadon and Horsforth.

Upgrades to the station at Ravensthorpe and a new relief road to the south of Dewsbury will support the development of 2,500 units at Dewsbury Riverside, while improvements along the A653 Leeds to Dewsbury corridor could facilitate the development of a major mixed-use site at Chidswell.

East Leeds Orbital Road, which is set to be completed by 2021, could unlock a major housing development adjoining Swarcliffe and Whinmoor. Alongside a new rail station, the Orbital Road will also enable further development at Thorpe Park, including 300 new homes and over 1.3m sq ft of office, retail and leisure space.

South Bank: With over 36 hectares of brownfield space potentially available for development, and advanced plans for the HS2 station, there are major opportunities for growth on Leeds’ South Bank. The area has traditionally attracted a more creative occupier, however a growing number of professional firms are also taking advantage of the enhanced amenity provision. With falling availability for city centre apartments and rising residential rents, there is a strong basis for mixed-use development.

York Central: York Central, York’s largest brownfield site, has the potential to deliver a new wave of housing and commercial space to the city. The 72-hectare development area on the edge of the city centre, between York Railway Station and Water End, will offer a minimum of 480 homes and up to 800,000 sq ft office space. This would help address the acute, growing shortage of high quality office space and the severe challenges the city faces in providing homes for York residents.

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Key Contacts

Susan Emmett

Susan Emmett

Director
Residential Research

Savills Margaret Street

+44 (0) 203 107 5460

 

Emily Williams

Emily Williams

Associate
Residential Research

Savills Margaret Street

+44 (0) 20 7016 3896

 

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