Cautious optimism
Once again we find ourselves in January, reflecting on last year and speculating on what this year will bring.
Last year we had started to see the resurgence of private sector development; and this gathered momentum throughout 2016. In Leeds we have seen the completion of the developments at Sovereign Square, Central Square and No 5 & 6 Wellington Place; all have been successful and continue to stimulate the office market. The central government have a requirement for 450,000 sq ft (with the option to extend to 750,000 sq ft) in the centre of the city, which is due to start on site in the coming months; and this is likely to stimulate further confidence in the office market. We’ve also started to see plans emerging for the mixed-use developments on the south side of the river. The CEG development at Holbeck and Vastints South Bank site are both exciting, long term regeneration projects that will have a major impact on the local economy. And that’s before we even begin to consider the positive impact of HS2 on that area of the city.
In my last blog New Year Evolution, I had expressed a hope that we would see PRS schemes starting on site during the latter part of 2016; but unfortunately that did not come to fruition. But it’s clear that there a large number of schemes that have progressed sufficiently enough to give developers the confidence to push the button and start work on site. Many of these schemes rise to over 15 storeys in height and are likely to start to change the skyline in Leeds. Developments at Quarry Hill, Monksbridge, Hulme House, Yorkshire Post, Ellerby Road and Globe Road are all anticipated to start on site during this year. And there are other more ambitious high-rise PRS schemes across Leeds that may be brought forward in 2017, such as Heeton Holdings Bridge Street site, which could rise above 40 storeys. All this demonstrates a real energy and dynamism within the region; and continues to establish Leeds as a real 21st century city.
As with last year, there doesn’t appear to be any slowing of the public sector construction projects in the region. The Universities at Leeds, Leeds Beckett, Sheffield, Hull and York are all progressing ambitious capital works programmes. Likewise, the student accommodation sector shows no sign of slowing. The central Leeds scheme at St Albans Place and the PFI scheme on campus at Hull University are just two examples of the continuing momentum in this sector. Whilst there is an extensive programme of schools projects in the region, these have been slow to come to market; a sign that that government spending on schools is being held back; perhaps not surprising given that we are 18 months into a five year electoral cycle.
And no review of 2016, nor speculation about 2017 would be complete without a mention about the impact of Brexit. 2016 was unprecedented in the extent of political upheaval witnessed both here and abroad. Despite that, the predictions of economic catastrophe did not materialise. But it does seem likely that once Article 50 is triggered during the early part of this year and the Brexit negotiations begin in earnest, we will feel pressure on our economy. And this in turn could affect investor confidence in both the regions and the country as a whole. From a regional perspective, the hope is that the UK continues to be seen as a safe haven for investors around the world; and they begin to see the increased returns that can be achieved in the regions rather than rely on an overheated London market. Manchester has benefited from this. And now we see Leeds, along with other northern cities, beginning to benefit too.
There are many reasons to be optimistic about our industry in 2017, but this is tempered by a degree of caution of how our exit from the EU will impact us all.