Developer sets stage for city’s west end to flourish

The listed property company has submitted an outline application for permission to develop a 300,000 sq ft office block in Whitehall Riverside.

It has also won detailed consent to build a 128-room hotel with GMI Construction and is in talks with prospective tenants.

Chairman and chief executive Edward Ziff told the Yorkshire Post: “We could let a hotel tomorrow, we could even let a hotel today. It’s really a question of how do we proceed.”

He said Leeds Arena has increased demand for hotel beds in the city.

Property director Richard Lewis said: “If our aspirations are to make the west end of Leeds the prime commercial district, along with MEPC, we have to make sure we have the right offer all round.”

MEPC, the property investor and developer, is developing the neighbouring Wellington Place scheme and has started work on a pre-let office block for Shulmans law firm. Chief executive Rick de Blaby told the Yorkshire Post last week that he hopes to begin another building in the new year.

Mr Lewis said Town Centre Securities has tenants in mind for its own scheme, but said “they are the same tenants everybody else has in mind”.

PwC, Squire Sanders and DAC Beachcroft are among the firms with requirements for new office space in Leeds.

Property agents have speculated that a raft of requirements from professional services companies will trigger a wave of development in the city, but new schemes have so far been slow to start.

Mr Lewis said: “It’s tough and the aspirations of the tenants haven’t quite come down to the right level to allow new development to start, certainly not new speculative development.”

He said professional services firms are being driven by economies of scale and generally require less space than they have at present but want large floor plates, which all adds up to a sizeable building.

“It really makes the economics of doing it quite difficult,” he added.

Mr Lewis said more funds are coming out of London looking for deals in the regions, “but whether they would be brave enough to take on a part pre-let building remains to be seen”.

Mr Ziff said: “Right now it’s a play doing any of these office deals; it’s the play between how you finance it and how you can structure the deal with the occupier to generate some residual profit for the developer.

“That’s more around financial engineering than pure property development terms.”

He added that the only companies capable of financing office developments are businesses like Town Centre Securities and investment arms of pension funds, like MEPC.

Steve Parkin, the Leeds entrepreneur behind the Clipper Logistics business, entered the market in the summer when he and wealthy Asian businessman Gurnaik Chima bought the derelict former Lumiere site in nearby Wellington Street.

They plan to create an “iconic” 200,000 sq ft development to tap into growing demand for top quality office space in the city.

Meanwhile, Town Centre Securities is in talks with prospective tenants and operators for its Merrion Hotel, a 100-bedroom facility next to the Merrion Centre.

The hotel has been closed since the middle of last year, when its operator ceased trading.

Mr Ziff said the hotel sector in Leeds has seen its fair share of distress and he is cautious about letting the building to the right tenant.

He said: “The last thing we need is something that carries the centre’s name being poor.

“Because while Merrion is not a luxury brand – it’s a mass market brand – it still needs to be good quality in the market it operates in.

“We want to be the easyJet of shopping and leisure and get the uses to match the audience.”

The new Leeds Arena is expected to lead to an extra 70,000 people staying overnight in the city each year, a business audience was told last week.

Speaking at the event, Jonathan Shires, the head of office agency at CBRE, said: “All we need is a five-star hotel and some Premier League footballers to fill it.”

Mr Lewis, of Town Centre Securities, said the demand is there, “but getting them off the ground is not easy”.

[email protected]