Blackfriar: Retail development to move city up the league table

Leeds is now in sixth place, but will jump ahead of Manchester, Nottingham and Liverpool once Trinity Leeds opens in spring 2013, to lie in third place behind London and Birmingham.

You might think the prospect of a new rival would worry Leeds’s existing shopping centres, but that is far from the case.

Edward Z iff, boss at Town Centre Securities which owns the Merrion Centre, is over the moon.

“Leeds is in a period of transition,” he says. “It is the only top 10 city with no major development for the past 10 years.”

He says that this is about to change with the Trinity Leeds scheme on site and Hammerson’s planning application in for an improved £800m scheme at Eastgate Quarters, which will feature John Lewis and Marks & Spencer as anchor tenants.

The latest figures out from White Rose and the Merrion Centre show that their void levels – industry speak for empty shops – are far lower than the rest of the UK.

While White Rose’s parent company Land Securities said void levels across the group fell to 4.3 per cent, White Rose’s void levels are less than one per cent.

It’s a similar story at the Merrion Centre where void levels are at record lows of under three per cent.

Mr Ziff believes that some big retailers are just waiting to pounce on the new space opening up in Leeds.

He says of his rivals: “Anyone promoting retail in Leeds has to be good for Leeds. We need some redevelopment.”

Of course the different shopping centres are at very different ends of the market. The Merrion Centre is famous for its discount stores whereas Trinity Leeds will boast Conran-designed roof-top restaurants with views over the Grade I listed Holy Trinity Church.

Land Securities’ portfolio director Gerald Jennings believes Leeds is in a unique position.

“The Leeds City region has a GDP in excess of £50bn – that level of expenditure and economic activity is equal to some European countries. It’s a huge economy,” he says.

Added to this, Leeds has a very diverse economy. In addition to the obvious strength of its financial, legal and business services operations, it is also still a major manufacturing centre.

“Leeds can weather the economic storm better than other cities,” says Mr Jennings.

Of course, Trinity Leeds is still two years from its opening date and Eastgate Quarters will be some time after that.

But the benefit of this time delay is that by that time the UK economy will be back on its feet.

Birmingham look out. Leeds will be fighting for second place soon.

n While there are pockets of hope, Severfield-Rowen’s confirmation yesterday that the structural steel sector continues to limp along illustrates just how painful this recovery will be for many.

The Thirsk-based group, which works on major building projects such as the Shard office block in London and the 2012 Olympics Stadium, is at the sharp end of the UK’s construction sector.

The structural steel industry is a good barometer of the general economy. If only a few big projects are being progressed, demand for its steelwork is weak.

Tom Haughey, the group’s refreshingly forthright chief executive, did not mince his words yesterday. A broad economic recovery remains “distant”, he said.

“We’re looking at a very minor increase in 2012 and then probably a minor increase in 2013. There are sectors within that that are a bit warmer or a bit colder. Overall, it’s relatively flat and not tremendously exciting.”

According to Haughey, the bright spots are scarce: industrial, transport, waste-to-energy and commercial offices.

Severfield, the clear market leader for structural steel in the UK, can get by through targeting projects like these – many of which require scale – plus dropping down the food chain to target deals it would previously have considered too small. While it previously only specialised in projects involving thousands of tonnes of steel, now it is pricing jobs as small as 500 tonnes.

The end result is a diminishing pool of competitors. Smaller rival Billington Holdings has previously warned of competitors quoting “suicidal” prices.

And as Haughey asserted yesterday, it will be “survival of the fittest”.

Big companies like Severfield can also chase the work abroad – its joint venture in India is going like a rocket, increasing its order book and gaining recognition among the country’s £100bn construction sector.

But companies which do not have the luxury of diversifying like this face a tough and lonely road to recovery.