Confidence is expected to return to the commercial property market this year following a decisive election result as developers and investors “crack on” with projects they were previously hesitant about.
Despite ongoing Brexit talks, Yorkshire property experts expect a productive year in both the office and investment markets as businesses press ahead with expansion or relocation plans.
Eamon Fox, partner and head of office agency at the Leeds office of property agent Knight Frank, predicts top office rents will reach £34 per sq ft in the city by the end of the year from a current headline figure of £30 per sq ft.
“Despite the ongoing Brexit talks, we are still seeing many businesses pressing ahead with expansion or relocation plans,” he said. “This is against a backdrop of a severe lack of options and an office development pipeline that continues to be raided by early movers, which is why we are forecasting continued rent rises over the next three years.
“It is also relevant to note that Prime Minister Boris Johnson is planning a big shift of civil servants out of London this year as part of his aim of “levelling up” opportunity and spreading wealth across the country. This could have major consequences for Leeds.”
Richard Heslop, owner and managing director of DE Commercial, added: “I expect a bounce within the commercial property sector in Yorkshire next year. The debate over Brexit and the threat of punitive taxation under a potential Labour government was holding everyone back – now developers and investors are ready to crack on with projects in the region.”
Although there is a huge development pipeline across Leeds, Claire Paraskeva, head of the Leeds Office of Avison Young believes the supply of new office space may not be able to keep up with demand as there is no speculative buildings currently under construction, coupled with an ‘acute shortage’ of readily available new space.
“Leeds will continue to provide significant opportunities for developers and investors in 2020 as the exodus from London continues, and those in the refurbishment market will thrive,” she added.
Meanwhile, 2020 is predicted to be another strong year in the region’s logistics and distribution sector.
James Scott, development director of Muse Developments in Leeds, said: “A number of recently announced large speculative deals are moving forwards, which will likely alter the dynamic of the big box market.
“Generally, it is considered that the market will start to improve, albeit cautiously, as we move into 2020. The election result has removed a degree of uncertainty and this should see investors re-engaging, increasingly as a more orderly Brexit route becomes clearer.”
Simon Dove, partner with Leeds-based property consultancy Dove Haigh Philipps, added: “Industrial land values for prime sites are strong and will continue to rise throughout the region, albeit at a lesser rate.
“Industrial design and build deals and speculative builds throughout the region will continue, supported by a lack of supply.”
A renewed emphasis on rebalancing the geo-economy and increased investment to the Northern Powerhouse, including Northern Power House Rail, are predicted by Keith Hardman, head of Cushman & Wakefield’s Leeds office.
Meanwhile, David Armitage, chairman of independent brickmaker,York Handmade Brick, said businesses could now plan ahead, adding: “We are now investing over £1m in brand-new, state-of-the art machinery, which will speed up productivity and increase profitability.”