City living revival set to bring new boom in building

Critics who forecast that the flats in Leeds city centre would become “the slums of the future” and condemned them as “rabbit hutches in the sky” should be eating their words right now.

The apartment market, which was born in the 90s and boomed in the noughties amid fears of oversupply, is thriving.

Young professionals can’t get enough of the high rise homes and fight for the best properties. Both owner occupiers and individual buy to let investors looking to invest their savings, are tentatively returning after a long hiatus when banks were loathe to give mortgages on flats and confidence in them was low.

Now there are signs that developers are coming back and they’re looking at both building to sell and to let.

East Street Mills is a prime example. It was left half finished when its Irish owners were forced into liquidation after the credit crunch hit in 2008. The receivers hung on to the property until recently, reaping an income from a newly-built section of offices they were able to let.

When they put the mixed use site on the market last year, there was a surprising amount of interest with Blackbrook Valley, a Midlands based company, winning the bidding.

The developer has refurbished the 19th century flax mill, creating 136 studios, one and two-bedroom apartments spread across four blocks and 80 of them are already rented.

Guy Ackernley, of Jones Lang LaSalle’s residential team in Leeds, says: “There are a lot of signs that the market is coming back. Sales are improving and the residential rental market is phenomenal. Our managed portfolio is 98 per cent occupied, which is incredible.

“Blackbrook Valley bought East Street Mills on the back of a strong rental market, good yields and the fact that Leeds has such a strong financial sector.”

Although funding for schemes is still scarce, cash rich developers who have been sitting out the recession are starting to explore opportunities in the city.

“There are two sites in Leeds city centre being actively considered for new mixed use development and those apartments would be built to sell,” says Guy

“But I don’t think we’ll see any high density residential schemes with 50-storey towers like Lumiere, which was planned but never built. They will be smaller, lower density schemes.”

He also believes that Investment Funds looking at building to let in London and the South East will target Leeds and other northern cities over the next 10 years.

Leeds looks set to become even more desirable thanks to the opening of its long-awaited arena, which will stage acts including Bruce Springsteen and Elton John this year.

The newly-opened Trinity Leeds shopping centre is another attraction for urban dwellers.

Jonathan Morgan, of city living specialists Morgans, says: “After a long and fallow period for city centre residential activity, there are sure signs that residential developers are beginning to look once more at city centre sites. I have had more discussions of this nature in the past six months than I have in the last three years combined.

“Early movers are likely to be focused on a rental model as has been evidenced at Crispin Lofts, where take-up has been outstanding-and this obviously requires a longer term approach and deeper pockets.

“It is unlikely that we will see any speculative residential development in the city centre this year but it seems likely that when sentiments shift and the market starts to come back, that it will do so very quickly.”

He adds: “Our city centre sales activity is up around 80 per cent on this time last year and our performance in August 2012 was the best we have seen for five years, on the basis of sales agreed.

“Put this into the context of the acute housing shortfall and it doesn’t take a great leap of faith to foresee some modest new speculative build in the next 18 months and indeed we are advising clients on two new schemes which, if all goes well, could be on site next year.”

He believes few of the high profile, high density schemes proposed before the credit crunch will be delivered, not least because buyers want bigger and better flats.

Granary Wharf is the new benchmark. The scheme, built and sold throughout the recession, has been a huge success with owner occupiers and tenants alike.

Its location helps. It is next to the canal and the railway station., but developers ISIS also put more thought into the design both inside and out learning from mistakes made during the boom years,

Apartments there command a premium. Whereas the average one bedroom flat in central Leeds starts from £500 per month, at Granary Wharf they are fetching £700.

Guy Ackernley says: “Granary Wharf proves that if the location, the quality and the price are right then apartments will sell well and let at a premium.”

For details of flats and commercial space to let at East Street Mills, contact Jones Lang La Salle , tel: 0113 244 6440.