Investors attracted to Yorkshire deals

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YORKSHIRE is becoming a “major force” in the UK property investment market as buyers seek greater value for money outside London, according to a real estate expert.

A report by Lambert Smith Hampton has found that investment in regional commercial property more than doubled to £4.2bn in Q1 2014, compared to £2bn during the same period in 2013.

Investment outside London made up 39 per cent of the £10.9bn total during the quarter, the highest percentage recorded for two-and-a-half years.

Regional markets are receiving more attention from investors, as prime central London prices continue to rise, it said.

Ben Roberts, surveyor in the capital markets division at Lambert Smith Hampton, said: “The North West and Midlands saw more activity in 2013 and are becoming quite heated now.

“Yorkshire is starting to be a major force in the UK investment market. More stock is coming to market now and UK institutions have got an appetite for property in the region.”

UK institutions were the largest net investors into the commercial property market, overtaking overseas buyers for the first time since the third quarter of 2011.

However, one of the biggest deals in Yorkshire this year was the £150m sale of Trinity Walk shopping centre in Wakefield to Orion European Real Estate Fund IV, which is sponsored by Orion Capital Managers.

Mr Roberts said: “Overseas buyers are pushing UK institutions out of London. They are still considering more secure investments, such as shopping centres, in the regions, but the demand outside London is being driven by UK institutions.”

The first quarter has also seen strong investment volumes for industrial property in Yorkshire, with industrial transactions accounting for 22 per cent of the regions investment deals.

A total of £102m industrial stock was transacted in Q1, twice the 2013 Q1 figure.

Significant deals included Legal & General’s purchase of Clifton Moor Industrial Estate for £42m and London Metric’s purchase of the M&S distribution units at SIRFT in Sheffield for £32.24m.

Meanwhile, the Leeds and Sheffield offices of LSH have reported continued increased take up in prime space in its Q1 industrial market review.

LSH said the results indicated that Yorkshire is now facing a shortage of quality accommodation that could impact on take up in the region for 2014 if no new buildings come to market.

The lack of quality stock is also providing a catalyst to strong rents, with prime rents in Leeds at £6.25 per sq ft, followed by Sheffield at £6 per sq ft and Wakefield at £5.75 per sq ft.

Robert Whatmuff, head of office and director of industrial and logistics at LSH Yorkshire, said: “This quarter’s take up figures are cause for celebration, as they signal the growing desirability of the region’s major cities as distribution centres.”

One of the UK’s largest lettings of the year so far was at LPP Sheffield, the 412,518 sq ft building let by LSH on behalf of the Logistics Property Partnership to Great Bear Distribution. “We now hope that developers and investors will direct their attentions towards providing further speculative developments as demand outstrips the supply. With encouraging signs of growth in the manufacturing as well as distribution sectors, 2014 looks set to be a very exciting period for Yorkshire,” Mr Whatmuff said.