Strength of private sector will carry city through tough times

A STRAW poll is often the best and most immediate way to judge sentiment.

We used it to gauge the mood among an audience of leading commercial property developers and professionals at an event in Leeds.

How many felt confident about their market in the year ahead? A third raised their hands.

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How many felt pessimistic about the next 12 months? Another third raised their hands.

And how many just don’t know? The final third said so.

The doubters among this audience might be worrying unduly.

According to Mat Oakley, director of commercial research at Savills, the international property services group, Leeds is among the strongest cities in the UK and will be among the first to recover.

He was one of the speakers at law firm Gordons’ annual commercial property seminar on Thursday afternoon.

Mr Oakley told the audience of 130 people that despite the “lurking horror” of austerity measures that have so far claimed 100,000 job losses out of a total that could rise to 800,000, the strength of the private sector in Leeds will compensate for the city’s relatively large public sector.

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“As long as the private sector is strong, I don’t think it matters how big the public sector is,” he said. “The good labour pool and accessibility will carry the city through.”

Savills estimates that Leeds is going to see the UK’s fourth strongest level of employment growth over the next three or four years.

It calculates that public sector job losses will be equivalent to four per cent of total employment.

Mr Oakley said that Leeds and Yorkshire are home to a solid and broad base of “very rapidly growing companies”, naming R&R Ice Cream, LNT Group, We Buy Any Car, Nexus Vehicle Management and Go Outdoors as examples of businesses that have seen a 50 to 200 per cent increase in turnover in the last year.

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He said there are signs of recovery in the Leeds office market with more activity in the first three quarters of this year than in all of 2010, with a fall in the supply of good quality space.

Law firms Walker Morris and Squire Sanders Hammonds and the Medical Protection Society and Hiscox Insurance all have requirements for new space. Mr Oakley said this shows that the private sector is confident in the market.

In the future, as public funding for regeneration continues to be scarce, he predicted more refurbishment than development work. Strong local leadership, he added, would help cities compete for limited funding.

Neil McLean, chairman of the Leeds City Region Local Enterprise Partnership, who took part in the event’s panel debate, said Government ministers should give the region “a fair crack of the whip” and acknowledge that “the skew towards the South East has been absolutely huge” in investment.

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On the retail side, Leeds is in a strong position. Land Securities’ £350m Trinity Leeds development will be a game-changer for the city, said Mr Oakley.

He added: “There clearly is a very strong feeling of positivity against this wave of negativity out there that Leeds has got a future and a lot of potential. There is a real opportunity over the next five or so years for Leeds to up its game and become much more significant.”

Mr Oakley, who travels around the UK presenting the Savills view on different markets, said: “It’s really nice to stand up and be very positive about a location.”

Other speakers included Kate Butterfield, a solicitor at Gordons’ planning and environmental department, and Nick Parsons, the head of research at National Australia Bank, the owner of Yorkshire Bank.

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In a downbeat assessment of the UK’s economic prospects, Mr Parsons said: “The only place left to get yield at the moment is commercial property. It’s because things are so grim that actually commercial property does not look so bad.”

NAB believes it “quite possible” that the UK could sink back into recession.

What Jack Wills says about UK

London’s retail market is soaring with record rents and nil vacancies, driven by international investors looking for a safe haven, said Savills.

“The next tier down you have ‘Jack Wills’ towns, which are strong affluent regional catchments and county towns on the fringes of major cities,” said Mat Oakley. “Then there’s the rest,” he added, referring to the tertiary towns – the places hit hardest by the internet – where 40-50 per cent of shops are vacant.

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