London companies fear exodus of talent due to high living costs, says property consultant

Jon Neale, head of UK research at consultancy JLL, said Leeds can “grasp the nettle of these north-shoring opportunities” as employers look beyond London for new office locations.

He said: “Companies are really concerned in London about their costs. It is not just office costs, though that is part of it.

“It is more about staff recruitment and retention… especially for mid and back office staff.

“They are worried about where their staff are going to live, not so much graduate level but when they get into their thirties and want families, do they commute too far and get frustrated about the lack of available accommodation?

“They are thinking they need to have their client-facing, big fee-earning staff in London and moving other people out into another part of the country.”

Mr Neale said graduates are choosing to stay in the big three cities outside of London, Leeds, Manchester and Birmingham.

He added: “The amenities in those locations - the shopping, restaurants and bars - are much better than they were 20 years ago and there is a much stronger case for companies doing that. We have already seen it happening.”

Mr Neale said the Northern Powerhouse project, the devolution of powers to Yorkshire and the focus on making Leeds function as part of super-city across to Manchester should combine to make a strong argument for companies in London to move staff to the North.

He also highlighted the promise of improved transport links across the Pennines, affordable housing and a better quality of life.

He made the comments at JLL’s annual Yorkshire Property Predictions event, which took place at Aspire in Leeds.

The audience of property developers, investors and advisors heard how Leeds had the second strongest year for office take-up on record last year and can expect another couple of years of strong growth due to upbeat employment forecasts in the growth sectors of professional services, science and technology.

Richard Thornton, a director at JLL’s office agency, said five new office buildings will come onto the market in the first half of the year. He said: “The future is very bright. Occupiers want quality and large floorplates to deliver efficiencies. Leeds is really well placed.”

Richard Harris, a director at JLL’s industrial agency, said consumer shopping habits would drive demand for industrial units with retail making up more than 50 per cent of the logistics sector.

He said large retailers like Amazon are investing in industrial space to get “order times as late as possible and delivery times as soon as possible”.

Lucy Thornycroft, regional director of the CBI, told the event that the biggest barriers to potential investors in Leeds are the quality of infrastructure and skills shortgages.