Development hopes rise as work 
starts on city centre office block

MEPC is weighing up the merits of speculative development at Wellington Place in Leeds after work started on a new pre-let office block on the site.

The property investor and developer broke ground yesterday on the first major office to be built in the city for six years.

Law firm Shulmans is taking 15,000 sq ft in the five-storey, 35,000 sq ft, BREEAM excellent-rated building.

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Rick de Blaby, chief executive at MEPC, said talks continue with six or seven potential tenants about other pre-let developments at Wellington Place.

He also revealed that he is considering speculative development.

“That’s not a flippant remark,” Mr de Blaby told the Yorkshire Post. “I’m not here to spoof it up. A lot of work is going on.”

He is looking at a plot of land on the opposite end of the site to the forthcoming Shulmans building as the obvious location.

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“It starts to frame the site,” said Mr de Blaby, who added that the new office could provide between 70,000 to 105,000 sq ft and would cost up to £30m to develop.

Mr de Blaby said: “There’s something happening in Leeds at the moment. We have the Trinity centre, which looks fantastic. We have a world-class arena coming through in September.

“We have the world’s biggest sporting event coming here in 2014. We have plans for all sorts of transportation. We have a council that I think is well-led and is clear about where it’s going.

“Things like Leeds and Partners are pulling together the business community to find its voice so that it can articulate what the city is about to an audience beyond the city borders.

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“We like to think Wellington Place can play its part in the revival of Leeds’ fortunes and future success and we have a business cycle that looks like it’s bottoming out.

“That’s not to say I think we will rocket upwards. We can see some modest recovery coming through.

“That’s a good climate for people like us to start investing in our real estate and to back the decisions people like Shulmans are prepared to take.”

MEPC owns, manages and develops property at seven estates across the UK worth £700m.

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It acquired Wellington Place in early 2007. Asked how much he paid for the site, Mr de Blaby has said: “I can’t remember and would prefer to forget.”

The start of the Shulmans office is seen as a key milestone for the city’s commercial real estate market, with a number of professional services firms facing expiring leases over the next three years.

Wellington Place is in competition with rival sites Whitehall Plaza, City Square, Broadgate and Sovereign Square, where KPMG has committed to a pre-let development.

“To the extent we have planning permission, we have no debt on the site, we have money in the company, we are in an unusual position to be able to actually deliver and honour our promises,” said Mr de Blaby.

He said this was not a dig at rival property companies.

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“We don’t win by dissing other people. We win because we put something out there that’s good. I don’t take for granted for a second the notion that other people can’t respond to the competitive environment that’s out there,” added Mr de Blaby.

Some potential tenants have privately expressed reluctance to take a risk and invest in new office space during a time of economic uncertainty.

In response, he said: “I completely get the fact that businesses are risk averse in a climate like this. Our proposition has to be about showing people that we are the lowest risk option.”

He added: “I accept a lot of people will always be quite sticky in the buildings they are already in, but we have to construct our deals in a way that’s as close to cash neutral as you can make it.

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“But you stay where you are in a building, there are other risks with that. If your own competitors take new buildings, you have got to ask yourself whether you can hang on to your top team and your top clients. There’s risks both ways.”

Mr de Blaby said outside central London, the property market remains quite tough with tight availability of capital and subdued investment markets.

MEPC is headquartered in Basingstoke, Hampshire.

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