Sterling Capitol reveals plans to double size of its estate

Mike Heydecke, director of Sterling Capitol, a property developer and investor. Picture Scott Merrylees
Mike Heydecke, director of Sterling Capitol, a property developer and investor. Picture Scott Merrylees
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Developer Sterling Capitol has revealed plans to more than double the size of its estate as it prepares to expand three major employment sites in Yorkshire.

The large-scale development programme, which would focus on the industrial sector, is the Leeds-based firm’s first in more than a decade and could take the schemes’ combined end value to around £200-300m.

The company, which has sites in Leeds, Goole and Barnsley, decided to start developing again four years ago and has since sold a number of buildings to fund future schemes.

Last year it sold five office buildings at Capitol Park Leeds, near the M62 in Tingley, to London-based property investment company Squarestone for £18.2m.

In 2015 it sold a Tesco distribution centre in Goole to Tritax for £47.1m in one of the region’s biggest deals of the year.

It now owns just three buildings in Leeds and is in a strong financial position, with no borrowings.

Mike Heydecke, director of Sterling Capitol, said: “This is big news for the company. It became an income-producing real estate business after developing the business parks.

“As we’ve come out of the financial crash, we’ve sold them as the market’s improved and now the company’s principally a development company again.”

He added: “I think the market’s good for us to work on a new programme, better than it’s been for the last 10 years.”

The company will spend 2018 doing the preparation work for developing the sites including obtaining the necessary planning permissions.

The company hopes to benefit from the next wave of local plan reviews currently being carried out by councils in which they will set out allocations for land development for the next 10-15 years.

“We’ve got opportunities that fit into that criteria,” Mr Heydecke said. “There is a massive shortage of employment land for manufacturing and warehouse space throughout the whole region and we see good level of demand. Rents have increased enough to make the developments viable and there is a lot of investor confidence in the industrial sector.”

Mr Heydecke said he was hopeful of starting work on the schemes in 2019.

In Leeds, there is scope to build phase two of Capitol Park on a substantial piece of adjacent land it owns, subject to allocation by the council, which would create another 5,000 jobs.

In Barnsley, Sterling Capitol is already building four industrial units in joint venture with Marshall CDP and there is scope for further development on 15 acres of land controlled by the company subject to allocation by the council.

There is also another 300-acre site, which is subject to allocation, which Sterling Capitol is keen to develop in a joint venture with a house builder.

Meanwhile, Capitol Park Goole has permission for up to 500,000 sq ft of additional industrial development on the existing site 30 acres.

The company is also looking for more industrial development sites in the region.

Mr Heydecke said he wasn’t concerned about the current political uncertainty affecting development plans. “As long as we see manufacturers and warehouse occupiers continue to expand then we’ll be confident in going forward,” he said.

“At the moment local authorities seem keen to spend whatever money is available in any EU pot so we’re constantly getting approached by councils to help them spend that money. That might assist in providing infrastructure, for example, which is a big positive benefit to getting occupiers.”