Retail and leisure sector sectors set to grow in 2017

The development of Greek Street in Leeds shows confidence in the pub, restaurant and hotel sectors, according to Christie & Co. Picture James Hardisty.
The development of Greek Street in Leeds shows confidence in the pub, restaurant and hotel sectors, according to Christie & Co. Picture James Hardisty.
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Yorkshire’s retail, leisure and hospitality sectors are set grow in 2017 as foreign investors flock to the region to spend their cash.

The firm’s Business Outlook 2017 report, which was unveiled to industry professionals in Leeds today, showed that foreign direct investment, including capital investment, development and partnerships, increased by 138 per cent in Leeds last year, partly because of the Brexit vote which led to improved exchange rates for overseas buyers. The trend is set to continue this year.

Christie and Co, which has an office in Leeds covering the whole of Yorkshire, sells, values and advises on properties in the hospitality and leisure, care, and retail sectors.

It was involved in a record number of retail transactions in 2016, including the sale of 45 petrol stations and convenience stores in the North of England, and advised over 1,000 business owners.

Petrol stations are in huge demand as they expand their convenience and food-to-go offerings, according to David Lee, regional director of Christie & Co’s northern region.

At the top end of the market, regional multiples and super dealers were involved in the majority of transactions. Last week, Spring Petroleum, which is based in Batley and has 27 sites, was bought by MRH which has 452 sites.

Speaking to the audience yesterday, Mr Lee said: “We saw multiple bids of the majority of petrol filling stations we were instructed to sell and this really is a market which is very hot at present.”

A key sale last year was Dearnside Service Station in Rotherham to Platinum Retail off an asking price of £2m,

Meanwhile, convenience stores with turnover of more than £15,000 per week were also popular and saw an price increase of 8.8 per cent in 2016.

Mr Lee said: “I am sure you have all noticed the trend of petrol filling stations becoming increasingly more like mini supermarkets and we expect to see further increased investment in petrol forecourts developing food-to-go and a convenience offering.”

Meanwhile, the average cost of running a pub is at a seven year high, with payroll costs the biggest increased cost. “The pub sector has issues to deal with however overall we think it is still a robust sector with lots of companies keen to acquire and open new sites,” Mr Lee said.

He highlighted the development of Greek Street in Leeds, which he said shows confidence in the sector. The street is now home to The Alchemist, The Liquorist, Gusto, Carluccio’s, a new Dakota hotel and All Bar One.

Rents in the restaurant sector are expected to reach a peak as competition intensifies.

“Operators will need to be at the top of their game to retain or increase market share,” said Mr Lee.

As the number of staycations grow, private equity investors are also circling the holiday park sector. The regional hotel market is also buoyant with high demand from overseas, in particular from Asia.

“Hotels with 40 rooms plus are the most popular,” said Mr Lee. “They usually require less input from an owner and are therefore seen as safer investments.

Revenue per available room increased by 3.4 per cent during 2016 and overall transactionally prices rose by six per cent in the hotel sector during the year.

Looking ahead, Mr Lee said: “We have talked to a number of hoteliers who are looking to add holiday cottages or lodges to their business to take advantage of the staycation market. We also expect to see a continued increase in the development of the aparthotel concept. The Yorkshire-based Rooomzz aparthotel chain is a great example of this.”

Trampoline parks reaching peak

TRAMPOLINE PARK operators will have to evolve if they are to survive in 2017, according to Christie and Co.

Jon Patrick, the firm’s UK head of leisure and development, based in Leeds, said operators would have to start standing out from the fierce competition.

“We have found that people have gone into the industry quite quickly with relatively small investments and they will need to revise that as the sector grows,” he said.

According to trampoline manufacturer Continental, there were 127 trampoline parks in the UK at the end of November 2016, including around 15 in Yorkshire.

Mr Patrick added: “We expect to see moves towards consolidation and in some cases failure...in this fledgling sector.”