Leeds Crane Survey 2022

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Leeds Crane Survey 2022

The Report

Why?
A report that measures the developments taking place across Leeds City Centre and its impact. Property types include residential, office, hotel, retail and leisure, student accommodation, education and research facilities, healthcare and transport

Where?
Our Crane Survey research area covers Leeds City Centre. 

What?
Developers building new schemes or undertaking significant refurbishments exceeding any of the following sizes: office – 10,000 sq ft; retail and leisure 10,000 sq ft; residential property – 25 units; education, healthcare and research – 10,000 sq ft; hotel – 35 rooms.

When?
Data for the Crane Survey was recorded between 4 January 2021 and 5 January 2022.

How?
The local Deloitte Real Estate team has monitored construction activity and planning permissions granted, supplemented by rigorous field research. This research has been verified by industry contacts and in-house research teams.

The findings

The skyline of Leeds city centre continues to develop at pace and we expect this to continue in 2022, with another strong year for construction anticipated. 2021 has been a record-breaking year for the Leeds Crane Survey with 10 new residential developments and the highest amount of education space delivered in a single year.

There has been a sustained level of activity within the office sector and the volume of office floorspace under construction is more than double when compared to the previous year. This level of construction reflects the high levels of letting and sales activity in the office market in the city during 2021. Given the strong demand, office development will need to continue to respond to take-up by occupiers as companies look for high quality accommodation. In timely fashion, office growth in the South Bank is now gaining momentum through CEG and Vastint that will deliver around 900,000 sq ft of employment floorspace as part of Phase 1. In addition to offices, a sustainable mix of residential properties contributes to the delivery of a desirable, greener, connected city centre that supports the growing city centre population, thus supporting the creation of new neighbourhoods and mixed communities.

Progress continues on the region’s Mass Transit System which will create a more accessible and inclusive transport system for Leeds and the city region. The programme will build on the existing momentum in Leeds to deliver an integrated network of walking, cycling, bus, rail and mass transit routes. We expect to see further investment within Leeds on transport and connectivity to deliver more linkages between the city core and the South Bank, which is already underway as proposals for the reconfiguration of City Square progress.

Leeds Innovation District is being brought forward in the west of the city centre and is helping to foster an ecosystem of knowledge intensive industries around its institutional anchors of the NHS Trust and the city’s main universities. Redevelopment of Leeds General Infirmary will create a fantastic real estate opportunity that we expect will support and enhance the role of the area as an innovation hub for the city region.

Following valuable contributions by LeedsBID in 2021 to bring vibrancy and footfall back into the city centre, Leeds has much to look forward to with the Year of Culture 2023, which will see signature events and a range of experiences across the city that are set to enrich the city spaces and lives of Leeds residents and visitors. 2021 was a good year for Leeds in terms of development activity and looks set to continue for a number of years to come.

The highest level of residential construction was recorded in 2021 since the Leeds Crane Survey started. Ten new residential developments commenced construction in 2021, which will deliver 2,267 new residential units. This is an increase of 210% when compared to the 732 new residential units that started construction in 2020.

The 2021 Leeds Crane Survey identified early signs of positive momentum in 2020 for new high density residential development in the city centre. The momentum has increased with levels of construction in 2021 that have not been seen since 2007.

There were 4,192 residential units under construction at the end of 2021, compared to 2,662 at the end of 2020, an increase of 57%. This increase reflects ten residential new starts, and indicates significant market confidence in new residential development and an appetite for city centre living in Leeds.

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As reported in the 2021 Leeds Crane Survey residential developments were delayed in 2020, with construction decisions affected by a number of factors, including the uncertainty caused by the potential impact of COVID-19, along with Brexit, on supply chains. In a survey of 857 construction businesses in the UK, 70 per cent stated that they had to cease operations during the pandemic and 80 per cent stated that their projects had been delayed as a result of COVID-19. The delays in commencing on large-scale residential developments that had been expected to start on site in 2020, have contributed to the high number of new starts in 2021 for the residential sector.

Despite the delays experienced in 2020, the 2021 Leeds Crane Survey reported a sustained level of activity in the residential sector over the previous few years. Despite the head winds and their short-term impact, the residential market in Leeds City Centre has subsequently bounced back stronger than ever. However, this has not yet been reflected in the number of completions, which were lower in 2021 than in 2020.

Whilst the high number of new starts in 2021 reflects to some extent the delayed starts from 2020, the volume of residential delivery in Leeds is higher than at any time since 2007, and there is a strong positive trajectory for delivery over the next couple of years.

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Over two-thirds of the new start developments are for sale, comprising 1,460 units with the majority being delivered as part of the Points Cross development and Phoenix on Saxton Lane (367 units). Guinness Homes’ Points Cross will deliver 928 new homes targeted at owner occupiers with homes available for Help to Buy and Shared Ownership. In addition, at least 35% of the new homes will be affordable housing. The Phoenix development will deliver 367 apartments which are being targeted at first time buyers and owner occupiers. These types of development coming forward are targeted at longer-term living (and ‘for sale’), rather than short-term rental such as buy-to-rent (BTR). This is likely to be the result of increased investment in placemaking (creating quality places where people want to live, work and play) which makes, city centre living more attractive for longer. As predicted in the 2021 Leeds Crane Survey this has led to the construction and future delivery of a critical mass of attractive residential accommodation, concentrated mainly to the south of the city centre. Although the proportion of BTR development has fallen (compared to ‘for sale’), the actual number of BTR units being delivered is broadly comparable with previous years, indicating there is still a demand for this type of accommodation in the city centre.

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The latest data (from 2017/18) for graduate retention figures show that 44% of graduates were still living in Leeds three years after graduation. The expectation that students on graduation will move from high quality student accommodation to good quality rental in the city centre is reflected in the large-scale BTR developments under construction in the city centre.

Upfront investment in placemaking as part of new residential-led developments is in evidence at Aire Park, a new ‘City Park’ which started on site in 2021. Aire Park will provide approximately 2.3 hectares of public green open space as part of the early phases of development. This city centre park is supporting the creation of new residential neighbourhoods to the south of the city centre, and residential construction activity is expected to continue in the future, building on the positive momentum gained from the ongoing regeneration of the Southbank, with Citu’s Climate Innovation District and the wider Aire Park development.

Residential developments under construction continue to be located predominantly outside of the city core. Five of the 18 residential developments under construction are in the South Bank area, three are in the Quarry Hill neighbourhood, one in the north east fringe, one in the south west fringe and three in the water fringe area to the south east. There are a number of smaller-scale residential developments being delivered closer to the city core; however, these include the conversion of four office buildings which are no longer fit for purpose.

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The delivery of SOYO Phase 1 and Phase 2 and the Phoenix development on Saxton Lane will bring more activity to the eastern fringe of the city centre, complementing the forthcoming Quarry Hill neighbourhood. These developments will provide a combination of residential units for sale and for rent with the delivery of about 370 units for sale, and 840 BTR units. This varied market offering will support the creation of mixed communities by providing both short-term and longer-term housing solutions.

The Guinness Partnership’s Points Cross development will deliver over 900 new homes for sale in the South Bank area – this number of homes being brought to the for sale market is further indication of the demand for long-term city centre living. This is supported by an increase in values in the city centre, following a sustained level of delivery in the residential sector over recent years.

Points Cross will build on the existing growth in residential neighbourhoods in the South Bank/waterfront fringe area. This development, alongside Citu’s Climate Innovation District to the east, and Vastint’s large scale Aire Park development, will deliver up to 850 residential units as part of Phase 1. The ground floor amenities and extensive public realm being delivered in the area will provide a valuable contribution to placemaking and the community in this part of Leeds city centre.

2021 has seen the continued delivery of family appropriate housing through large apartments and town houses as part of the next phase of Citu’s Climate Innovation District; The Guinness Partnership’s Points Cross, where 25% of the units will be three-bed; and Igloo Residential’s Ironworks which includes 2-3 bed town houses and apartments. With the growth in city living in Leeds, it is anticipated that developments will continue to provide a broad housing mix to meet the demands and lifestyle requirements of different demographic groups and create a city that is accessible and attractive to all. As reported in previous Leeds Crane Surveys future developments will need to consider carefully the need for additional social services infrastructure, such as schools and medical centres, in order to meet the needs of a growing city centre population.

Luxury apartments are currently being delivered in Leeds’s Northern Civic Quarter with Priestly Homes having commenced construction on the city centre’s first £1m-plus penthouse apartment scheme, as part of its plans to transform the disused Grade II Listed 2 Great George Street into 76 luxury apartments.

Beyond the South Bank regeneration area, construction has started on new council social housing at Meynell Approach. This development will deliver 28 new council homes in Holbeck as part of the Council Housing Growth Programme’s target to deliver about 300 new units of social housing per annum over the next five years. The scheme contributes to the health and well-being of residents through the provision of better-quality social housing.

The residential market has reached a critical mass in Leeds City Centre and so is able to support the provision of affordable homes. For example, Latimer, Clarion Housing Group’s development arm, is set to bring forward approximately 1,400 new homes on the former City Reach site, providing two types of affordable housing. Latimer is currently consulting on its proposals, which subject to planning permission are expected to commence on-site in Spring 2022. The 13-acre brownfield site between the River Aire and Kirkstall Road is targeting the delivery of 35% affordable homes (subject to grant funding). It is currently intended that the site will accommodate a mix of houses and apartments, with about 500 affordable homes (including both social rent and shared ownership) alongside 930 new homes for private sale and rent.

The Leeds Core Strategy annual housing target is 3,247 across the local authority area. In 2021 the city centre delivered 24% of this target through 786 completed units. Based on the schemes under construction in 2021 and estimated completion dates, this is expected to increase over the next couple years, to 48% of the annual target in 2022 (1,573 units) and 50% in 2023 (1,623 units).

As anticipated a large number of residential developments commenced in early 2021 following the delay in large-scale residential developments that might have commenced in 2020. This contributed partly to the record-breaking amount of construction activity in the residential sector in 2021, which is expected to increase the annual volume of residential delivery in the city centre over the next few years.

The large-scale delivery of residential developments paints an optimistic picture for the future of Leeds. The differentiated offer of housing currently under construction reflects a growing and diverse city centre population. The provision of both BTR and ‘for sale’ homes, and larger units, will attract different types of occupiers such as families, young professionals and right-sizers, creating successful, mixed multi-generational communities and adding to the vitality of the city centre.

There were five new starts in the office sector in 2021, one more than in 2020 and close to the Crane Survey average of 4.4.

Whilst the number of new starts remains relatively unchanged, the volume of office floor space under construction was more than double the previous year. In 2021 over 860,000 sq ft of office floor space was under construction compared with about 380,000 sq ft in 2020.

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Following the previous year’s second highest volume of office floor space completed in the history of the Leeds Crane Survey, only one scheme was completed in 2021, the refurbishment of Wellington House which delivered 48,300 sq ft of Grade A office floor space.

Whilst there continues to be much debate around the future role of the office, the market is responding to changing demands and seeking to deliver offices with the flexibility to meet future priorities.

According to data from the Leeds Office Agents Forum (LOAF), office take-up remained strong in 2021, with 202,543 sq ft of city centre office deals having completed in Q3 2021. This represents a strong bounce-back following a 55% fall in office take-up in Leeds city centre in 2020. Evidence suggests that the market continues to recover from COVID-19, with city centre activity in Q3 2021 showing a recovery since the early summer and a 130% increase over the corresponding period in 2020. An overall 85% increase in office take-up was also recorded in 2021, when compared to the previous year, with office take up in 2021 totalling 624,192 sq ft. Given the strong demand, office development will need to continue to respond to take-up by occupiers as companies look for high quality accommodation. The demand for high quality is evidenced by city centre rents, where several city centre transactions in Q3 2021 completed at rents ranging from £32 – 34 per sq ft, and there is confidence that the high levels of occupier activity will continue into 2022 and beyond, with businesses decamp from older accommodation into quality spaces that better suit their needs.

In 2021 over 500,000 sq ft of Grade A New Build floor space started on site: demand continues to outstrip supply and the continuing delivery of largely speculative office space is in response to the expected demand.

The majority of new start office development is being made on a speculative basis, with only two pre-let agreements in place. 83,000 sq ft has been pre-let to DLA Piper at City Square House, and the global law firm is expected to relocate from Princess Exchange and West One in 2024. The commencement of City Square House is a significant new start of 173,500 sq ft, with the site having been in the pipeline since planning approval was originally granted for an office development in 2011. In addition, Town Centre Securities plc’s new Merrion Centre office building will provide a new head office for StepChange Debt Charity, alongside speculative co-working offices.

A number of the residential new starts in 2021 are conversions from former office uses. In spite of the lack of supply and growing demand for office accommodation, office space is being lost in the city centre. The conversion of smaller scale office floorplates to residential units reflects the changing demands of office occupiers and the and that these offices are not fit for the changing market, which demands Grade A flexible accommodation. The existing stock of small-scale office floorplates does not justify the cost of investment in upgrades in order to bring them in line with building regulations requirements and occupier demands. Increased demand is expected for co-working and multiple-occupier offices and incubator spaces, with smaller businesses seeking well-serviced, amenity-rich spaces. The Leeds office market shows evidence of growth in the provision of co-working and multiple occupier offices, such as at Bruntwood’s forthcoming West One Estate and Castle House scheme, the Merrion Centre office building, and other schemes where collaboration and high-quality amenity space are prioritised.

There was evidence of increased activity in the market by co-working occupiers, in Q1 2021. INC Spaces, a shared and flexible serviced workspaces provider, completed on 19,000 sq ft 1 The Embankment and a further 6,000 sq ft at 2 The Embankment. In addition, 2Work, a co-working company, completed on 14,000 sq ft at Bank House. Most recently in Q4 of 2021, co-working space provider Cubo completed a deal for 19,821 sq ft at Wellington Place.

Three of the five new starts are new-build developments (Merrion Centre, Globe Point and City Square House), alongside two refurbishments (Drapers Yard and the conversion of the former Crown Hotel).

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The improvement of the Merrion Centre, including the erection of a 17-storey office building on top, is the largest office-led development under construction in 2021. It will deliver 247,914 sq ft of office space and over 10,000 sq ft of ground floor retail space at the Central Square. The development of the Merrion Centre as a mixed-use destination follows investment by Town Centre Securities over the previous five years, delivering a number of projects including Merrion House, the Ibis Styles Hotel and the refurbished CitiPark multi-storey car park.

Construction also commenced on Globe Point, the first of CEG’s office buildings within its Holbeck portfolio. Construction is expected to commence in early 2022 on a further office building, One Globe Road. Together, Globe Point and One Globe Road will offer over 170,000 sq ft. This represents the commencement of a landmark project for the regeneration of the South Bank, which will deliver wholesale mixed-use regeneration and expansion to Leeds city centre.

Construction commenced on Draper’s Yard development in Leeds’ South Bank, also a part of CEG’s Holbeck portfolio. Drapers Yard is being developed for Labcorp, a global diagnostics and drug development company, which is set to occupy 68,345 sq ft. According to LOAF data Labcorp’s commitment is the largest city centre deal in Q3 2021. This commitment will support the regeneration of Holbeck and provide a new business destination to the south of Leeds Railway Station. This growth in activity signifies a gaining of momentum in the office sector within the Southbank area; this is supported by Vastint commencing on its Aire Park development which will deliver around 900,000 sq ft of employment floorspace as part of its Phase 1 plans.

Drapers Yard will complement plans to redevelop CEG’s adjacent Grade I Listed Temple Works, which is set to become the new home for British Library North. This will form a knowledge cluster within the South Bank area and will complement investment in Leeds in recent years in schemes that support health, science and innovation. Labcorp will use its Leeds base to leverage the capital investment in healthcare, as part of Leeds Teaching Hospital’s NHS Trust’s flagship five-year ‘Hospital of the Future’ development.

Citu’s The Place within the Climate Innovation District has delivered the first net zero carbon commercial building for Leeds, reflecting the importance of delivering sustainable offices for the future.

This follows a commitment by Leeds City Council to make the city carbon neutral by 2030 and its declaration of a climate change emergency in March 2019. The Council has set out a number of measures to assist in making Leeds carbon neutral by 2030, through a series of updates to the Local Plan: these include a desire for all new developments to measure carbon emissions across the whole life cycle of the buildings; new buildings to be constructed sustainably and to be net zero carbon, and to ensure that enough renewable and lower carbon energy is delivered to meet its net zero aspirations. With the aim of reducing gas emissions from buildings in the city and the promotion of a low carbon economy it is expected that more sustainable, net zero commercial buildings will be brought forward over the coming years. This is evidenced recently through Bruntwood’s forthcoming West One Estate and Castle House scheme, which is expected to commence in 2022 and will provide 27,000 sq ft of refurbished office floor space that will be net zero in operation, with the addition of a net zero carbon extension. As employers and tenants become increasingly aware of their carbon footprint, the demand for highly sustainable offices is expected to increase.

The 2020 and 2021 Leeds Crane Surveys identified a move away from traditional office models of floor space, towards more flexible spaces that provide community and well-being benefits. This trend continued in 2021 with construction having started on Globe Point, which will provide spaces for yoga classes, business lounges and flexible co-working spaces. The delivery of amenity-rich office buildings will also continue with One Globe Square and the future office phases at Aire Park, which are both anticipated to start on site in 2022.

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Office developments under construction and completions are located predominantly in the Southbank regeneration area and in the financial district located in the west of the city core. The transformation of the financial district continues, with 11-12 Wellington Place under construction. Bruntwood’s West One and plans by McLaren to redevelop the adjacent site are set to complement the Wellington Place regeneration programme.

Future schemes are expected to continue to provide large-scale floor space in the future, including the 150,000 sq ft office proposed as part of Marrico Asset Management and Helios Real Estate’s mixed-use Lisbon Square development and 55,000 sq ft as part of Allied London’s recent plans to repurpose the Old Alea Casino at Leeds Docks into Grade A flexible offices.

The repurposing of the Old Alea Casino will support the reinvigoration of the Leeds Dock, which is already home to Sky’s Digital and Technology Services Campus. Allied London’s plans to deliver flexible workspace at the Dock will bring new daytime vibrancy. These improvements will complement recent development activity in the south-eastern fringe area, at Citu’s Climate Innovation District and Victoria Riverside.

Citu’s Climate Innovation District will create a new community to the south east of the city centre. Increased footfall is expected to improve further connectivity between the city core and the south east of the city, following the recent relocation of Home, one of Leeds’s fine-dining establishments, to a new waterfront venue, where it will occupy the former Oracle Bar, part of the Brewery Wharf development.

Education

In 2021, 465,958 sq ft of education floor space completed, the largest amount in the history of the Leeds Crane Survey. This follows a previous record completion of 419,758 sq ft in 2019. There were no new starts in either 2021 or 2020, and consequently there was no education floor space under construction in 2021.

The developments completed in 2021 across higher education institutions are at Leeds Beckett University and the University of Leeds. Leeds Beckett completed on its new Creative Arts Building, and the University of Leeds on the Esther Simpson Building.

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Leeds Beckett’s 156,077 sq ft new state-of-the-art Creative Arts Building was completed in 2021, as a hub for creative arts education in Leeds. The development of creative arts in the city is supported by the completion of Whitehall Road Studio on the former Polestar Petty Printworks site which has delivered new TV and film studios. These developments, alongside the presence of creative sector companies in Leeds including Channel 4, are expected to be a catalyst for further growth in Leeds, and to attract and retain young creative talent to the city.

Growth in the creative sector and decisions by creative companies to locate in Leeds is evidenced by office deals in Q1 2021: US Studio and Novara Media together completed on about 750 sq ft at the Leeming Building, Ludgate Hill. US Studio is a creative agency with image makers, designers, film makers and brand-builders, whilst Novara Media is an independent alternative media organisation.

The University of Leeds delivered the 68,609 sq ft Esther Simpson Building as part of its Western Campus and investment in its ambitions for the Leeds University Business School (LUBS). The University is also continuing with public realm improvements on its Western Campus, with Phase 1 now complete and Phase 2 due to complete in spring 2022.

In addition, at the University of Leeds the refurbishment of the Faculty of Biological Sciences and the construction of the Sir William Bragg Building completed in 2021. These developments will support cutting-edge research, and an improved student experience, whilst strengthening the University’s research resources and its collaboration with industry.

Whilst there is no education floor space under construction in Leeds city centre the University of Leeds is continuing to invest in its estate in locations outside the Crane Survey area, including the start of work on its Bodington Playing Fields development in Adel.

The University of Leeds also has plans to deliver an Infrastructure Innovation Park south east of the city centre. Construction is currently on hold, but once delivered the Infrastructure and Innovation Park will provide a facility for creating an innovative and collaborative space for world-leading interdisciplinary researchers in infrastructure materials, high speed railways and systems integration, structural dynamics and robotics. The Infrastructure Innovation Park will complement Nexus, the University’s centre for innovation and enterprise which completed in 2019. It is set to become an important national centre for ensuring that the UK’s infrastructure is resilient, responsive, adaptable, economical and sustainable. The Infrastructure and Innovation Park is also the planned home for the Centre for Infrastructure Materials, the only centre of its kind in the UK. This will enhance the University of Leeds’ existing prominence in material science and advanced functional materials and soft materials.

The University of Leeds campus development projects reflect its strategic aim to secure a place among the UK’s top ten research universities.

Following a record year for completions in the education sector the pipeline for next year is currently limited, particularly for the higher education institutions. However, Leeds City College was granted outline planning permission in July 2021 for its Mabgate Campus. This follows a period of rapid growth for the College over the past decade and forms part of its commitment to provide “inspiring education facilities” through investing in new campuses. This investment by the College follows the delivery of its new Quarry Hill Campus in 2019. The Magbate Campus proposals include high quality facilities, office space for staff and residential accommodation on site. Overall, the proposals include a flexible residential element, and an educational element, with supporting amenity areas and a new sports block (including a sports hall and a publicly accessible Multi-Use Games Area (MUGA). The regeneration of this underutilised site is expected to act as a catalyst for further investment in the wider Magbate area.

The limited pipeline for new construction is considered to be a consequence of the financial impacts of COVID-19 on higher education institutions and follows a period of high construction activity in the education sector in previous years. Investment is expected to bounce back as the University of Leeds and Leeds Beckett University look to continue to attract talent. Activity by higher education institutions is expected to increase over the coming years as plans associated with the Leeds Innovation District develop. The Leeds Innovation District is expected to support continued future investment by the universities, particularly in health innovation, engineering, financial and business services, data and analytics, and digital technologies. It will aim to maximise the benefits of the spatial clustering of the universities and the hospital and promote collaboration and innovation among like-minded industries and individuals.


Innovation and Healthcare

Leeds Innovation District in the west of the city centre is being brought forward around the institutional anchors of NHS Trust and Leeds’ universities. Success for the innovation district is a vibrant ecosystem that leverages Leeds’ research strengths in health science, robotics, AI and computing; applied to the City Region’s sectoral strengths in healthcare, fintech, digital and manufacturing, together with emerging low carbon and future mobility markets.

The strength of its anchor institutions and private sector occupiers, combined combined with a wealth of civic, cultural and heritage assets, presents an opportunity to create a distinctive innovation hub capable of competing across the national and international marketplace for talent. Leeds’ rapidly expanding creative and digital sector will also be a key enabler of growth and innovation across the business base.

The Leeds Innovation Partnerships is a partnership between Leeds City Council, the University of Leeds, Leeds Beckett University and Leeds Teaching Hospitals Trust to develop a word-class hub for healthcare, industry partnerships, innovation and research.

The £450m redevelopment of Leeds General Infirmary represents a huge investment that will expand Leeds NHS Trust’s services, providing patients with world-class care based on the latest technologies, treatments and research. The delivery of two new hospitals on the Leeds General Infirmary site is being developed as part of the Innovation District and the government’s New Hospitals Programme which has committed to building 40 hospitals by 2030, backed by an initial £3.7 billion investment. Disused buildings on the site are already being demolished, with substantive construction expected to start in 2023. Surplus land within the estate provides creates an exciting opportunity to expand the role of the Innovation District as the city’s prime location for ideation, creativity and collaboration.

2021 has seen six new starts with 2,226 bedspaces currently under construction. This follows only one new start in each of the previous three years, and only 942 bedspaces under construction in 2020.

The increase in activity in the student accommodation sector follows investment in previous years from higher education institutions to attract talent. It is also in response to a continued increase in student numbers in Leeds, with 44,400 students in the period July 2020 to June 2021; this represents a 27% increase in student numbers compared to the previous year.

The construction of the new creative education hub in the city is expected to increase the number of courses in creative arts and design in higher education over the coming years. In addition, the University of Leeds has a strategic aim to secure its place in the UK’s top ten research universities, which will enhance its ability to attract funding and investment. Ongoing investment by the University of Leeds and Leeds Beckett University in campus estates and the student experience is enhancing the universities’ reputation, as evidenced by the increasing student numbers. The number of international students in Leeds has increased: 4,830 overseas undergraduate students were registered at the University of Leeds for the 2020-2021 academic year, an increase of 13% increase compared to the 2019-2020 academic year. The growth in the student population, including international students, is expected to increase the demand for high quality accommodation. The uplift in construction activity in 2021 for student accommodation is seen as a response to this.

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Pickard Properties has begun work on the redevelopment of Carton Hill in the Woodhouse area of Leeds, north of the city centre. The construction of a 604-bed scheme will replace an existing 239-bed development on the same site in 2001. The new £40m scheme is expected to be leased by Unipol, housing University of Leeds students. Pickard Properties’ investment to improve the quality of student accommodation at Carlton Hill is recognition of changing student needs for social interaction and well-being.

The design of new developments demonstrates a broad investment in the provision of high quality, amenity-rich student living spaces. Developments are expected to include a variety of on-site amenities and communal spaces that support socialising and studying. This is evidenced by the recent refurbishment works at YPP’s Q One Residence on Wade Lane, which has delivered a new gym, study spaces, lounge areas and new enhanced external amenity space. In addition, on completion in 2024 44 Merrion Street will deliver a fitness studio, games room, multimedia and cinema rooms, communal shared kitchens and private rooftop gardens.

There were two student accommodation completions in 2021: Altus House (formerly Hume House) on Wade Lane delivered 715 bedspaces and Oak House on Park Lane delivered 188 bedspaces.

Within the Arena Quarter the 44 Merrion Street student development is under construction, alongside YPP’s Live Oasis: Strato Scheme on Wade Lane, adjacent to Altus House. Olympian Homes purchased Arena Point on Merrion Way during 2021, which will see the 19-storey office block demolished in order to make way for a 43-storey tower providing 705 student beds. These developments will contribute to the growing cluster of student accommodation, including tall student-residential buildings, within the northern Arena Quarter of Leeds.

Smaller-scale student accommodation is being delivered to the west of the city centre, between Kirkstall Road to the south and the University of Leeds to the north (Oak House and 34 Hyde Terrace). Both developments will accommodate the growing student population and infill the space between existing student accommodation along Kirkstall Road and the University of Leeds campus.

The student accommodation developments currently under construction are due to complete over the next three years, and there is a relatively strong pipeline of projects which are expected to start on site in 2022. A large number of student beds due to start on site next year, following recent planning approvals, are due to be delivered as part of whole-scale mixed-use schemes, at Lisbon Square, the Former Yorkshire Bank HQ site, and the former Debenhams site.

The Lisbon Square mixed-use development, approved in November 2021, will deliver around 500 new student beds on the Leeds International Swimming Pool Site on the western edge of Leeds’ commercial district. Alongside this the former Yorkshire Banks Leeds HQ site is set to deliver 1,200 student bed spaces and as well as a multi-use exhibition building.

Following its closure, the Debenhams department store on Briggate has remained vacant. However, in July 2021 planning permission was granted for its redevelopment (including the addition of a rooftop extension) for 124 student beds on the upper floors and 40,000 sq ft of flexible commercial space at the basement, ground and first floor levels. The repurposing of the department store into a student-led development and the location of student accommodation within the city’s retail district is expected to contribute to the long-term vitality of the city centre whilst preserving an iconic Grade II Listed Building.

The demand for student accommodation is driven by a variety of factors that include increasing in student numbers; the replacement and decommissioning of old existing stock; students wanting to live in central Leeds and in higher quality, well-managed, amenity-rich purpose-built accommodation.

With the diversification of the retail core and other mixed-use developments across the city centre it will be important to ensure that student accommodation is fully integrated with its surroundings in order to deliver successful communities.

Retail and Leisure

There were no retail-only new starts in 2021, however small-scale retail commercial spaces were delivered on the ground floors of larger mixed-use schemes including the Guinness Partnership’s Points Cross development, the former Crown Hotel and the Merrion Centre.

There were two leisure completions in 2021, the refurbishment of cultural asset Howard Assembly Rooms and the restoration of First White Cloth Hall. The latter forms part of the £1.5m Heritage Lottery funding for conversions and repairs to buildings on Kirkgate.

The Retail and Leisure sectors continued throughout 2021 to feel the effects of the COVID-19 pandemic, with a further lockdown in January and subsequent restrictions requiring Retail and Leisure sectors to chart their way through a range of challenging rules and rolling closures.

The completion of First White Cloth Hall and Howard Assembly Rooms have provided over 65,000 sq ft of new leisure space within the city, whilst preserving two of Leeds’ cultural assets for years to come. These completions come prior to the Year of Culture in 2023, and provide spaces for year-round cultural offerings in the form of music, performance and art. Opera North’s £18m Howard Assembly Rooms project has transformed its performance space through the refurbishment of the existing Premier House office building, multiple use changes to the retail units and restaurant, and the creation of a new Education Suite at ground floor level. This development also features a linkage to, and two-storey extension of, the adjacent Linacre/Harewood studios.

Despite limited construction activity in the Leisure sector, similar to 2020, larger schemes have continued to provide ground floor spaces for people to work out, socialise and relax. Notably the Points Cross development will feature a local pub and restaurant at ground floor level as well as commercial and retail space.

2021 saw the closures of major high-street giants Debenhams and retail group Arcadia, leaving significant gaps in the central retail core on Briggate and within the Trinity Shopping Centre. These closures reflect the shift in consumer behaviour to online shopping, particularly since the onset of the coronavirus pandemic. Online spending increased from around 9% of total retail sales in September 2011 to about 19% in September 2019 and rose still further during COVID restrictions to 34.5% in March 2020 and then 37% in March 2021. Although the level has fallen as restrictions to shopping in store have eased, online sales have remained high, at 28.1% of all retail sales in September 2021. Despite this reduction the proportion of online sales remains high compared to pre-pandemic levels.

Whilst early 2021 brought back a period of COVID-19 restrictions, further lockdowns have been avoided, providing some relief for the retail, hospitality and leisure sectors. The vaccination programme has been successful in allowing retail, leisure and hospitality to remain open. Increased levels of activity are evidenced by an increase in spending on leisure, eating and drinking out, compared to both the previous year and pre-pandemic levels. Deloitte’s Consumer Tracker (Q3 2021) reported a 41% increase in spending on eating from Q3 2020 to Q3 2021 (and a 22% increase from Q3 2019 to Q3 2021).

High-street shopping in Leeds will be enhanced by the Merrion Centre development. Over 10,000 sq ft is set to be refurbished for a Home Bargains store. The budget retail giant has retained a prominent position within the new development, which will continue to provide essential shopping for Leeds residents, as well as serve the ever-growing student population around the Merrion Centre.

Within the city centre LeedsBID (Business Improvement District) continues to enhance the city centre through a range of investments and initiatives, making it a better place to live, work, visit and shop. After a successful first term from 2015 to 2020, LeedsBID is set to continue its work in improving the city centre following a pledge of £14million from businesses in the city. This funding will be invested in the city centre, supporting the work the BID for another five years. Since its launch LeedsBID has been a catalyst for change through a range of projects that seek to make the city centre cleaner, safer, more animated, more welcoming, more skilled, greener and more connected. The BID has also provided a valuable contribution in bringing people back into the city centre through a series of events and installations animating public space, making the city centre more friendly and increasing footfall for local businesses.

Given the impact of COVID-19 restrictions on the retail and leisure sectors, the possibility of new COVID-19 variants represents a big risk. However, business continues to be supported by government measures. Arguably businesses have been able to utilise the financial support from the government, and the impact on this sector could have been much worse. However, it remains to be seen if these short- to medium-term support measures can support the long-term future of the retail and leisure sectors.

Despite strong headwinds for existing occupiers in this sector, opportunities appear to have arisen for more niche and independent retail and leisure offerings, which are on the increase, with new businesses like the Pink Room opening in the Corn Exchange, and independent businesses moving to larger premises. An example is Poppy’s Potting Shed, a successful lockdown business that is moving from Armley into larger 1,000 sq ft premises on Kirkstall Road. This can be seen as a positive outcome of the large shift to online shopping, with the desire for in-person leisure and retail being increasingly focused on the allure of independent businesses. The COVID-19 pandemic has therefore been successful in driving innovation and new formats within the retail and leisure sectors as businesses look to respond to shifts in consumer demand and behaviour.


Hotels and Culture

There was one new start in the Hotels sector in 2021, the refurbishment of the Queen’s Hotel, which also completed in Q3 2021. This low level of activity is consistent with 2020, when there was also just one new start. In Q3 2021 the Citispace Hotel on Regent Street completed, delivering 54 hotel beds.

Future trends look more positive, with the possibility of three new hotel developments in the pipeline, The Wesley Hotel, 17 Wellington Street and George Street which together could provide 268 new rooms.

In addition, new large mixed-use developments will include hotel beds. For example, the Leeds and Lisbon Square developments will include two hotels providing 198 and 300 beds respectively, continuing the trend seen in developments such as Caddick’s SOYO and Priestly Homes’s Great George Street.

Hotel occupancy rates in Yorkshire and Humberside dropped dramatically in 2020, from 79% (in 2019) to 44%, a trend consistent with the rest of England. Whilst occupancy rates have not fully returned to pre-pandemic levels, they recovered to 77% in 2021.

Proposals for new construction within the Hotel sector are mainly for the north east of the city centre; however large proposals such as the Victoria Gate Hotel are yet to come to fruition. There seems to be some hesitancy in bringing forward developments that have planning permission, no doubt exacerbated by uncertainty from the pandemic. A lack of travel for business or pleasure could see a further delay in construction of these permissioned developments, and the focus may be on refurbishments of existing hotel stock, as seen in 2021 with the Queens Hotel.

However, with increased occupancy levels and more people taking shorter holidays, there is some cause for optimism in the hotels sector. In addition, investment in cultural offerings and activities within the city centre should improve confidence in the delivery of the delayed pipeline for hotel developments.

The Queens Hotel benefitted from a £16 million refurbishment in 2021, which included renovations to all the bedrooms plus the addition of 16 rooms being (to a total of 232 rooms), a reinvented social hub, a transformed retail F&B offering via the Grand Pacific and Café Pacific, and a new on-site gym. The refurbishment adds an updated hotel offering to City Square for leisure and business travellers arriving from Leeds City train station.

The transformation of the Queens Hotel to a “place to meet with friends, colleagues or to seriously upgrade your ‘working from home’ surroundings” reflects the changing trends in both social and working habits. With the shift to flexible, co-working and short-term rental spaces there has been an increase in the demand for unique and readily-available ‘hubs’ within the city.

Leeds will champion culture in 2023, and the Year of Culture will see a wide range of events and cultural interventions taking place. Culture will be a feature in Leeds over the next few years, as plans are in place to transform City Square into a rolling exhibition space for artists, engineers, designers and other creatives to showcase their work, attracting footfall to this area of the city centre. The plans of Leeds City Council’s plans to transform City Square subsequently into a woodland ‘glade’ in collaboration with Re-form Landscape Architecture will provide a hub for community, creativity and culture.

Furthermore, the Leeds Year of Culture 2023 will see 12 signature events and a range of experiences across the city throughout the year that are set to enrich the lives of Leeds residents for years to come, through an estimated £114 million in extra direct and indirect revenue from the visitor economy.

The British Library of the North is set to become another strong cultural offering for Leeds, following a £25m cash injection from the government to support the project as part of the West Yorkshire devolution deal. Situated within the South Bank on the Temple Works site in Holbeck, it will create transform into a new and revitalised public space in a Grade I Listed building.

Historically, investment in transport and connectivity infrastructure has struggled to keep up with activity in other sectors. However, in 2021 a significant amount of work was carried out on the Connecting Leeds programme which continues to deliver extensive public realm and transport improvements across the city centre. The recent RIBA-led competition has also progressed plans for the reimagination of City Square, a key gateway into the city centre for visitors.

In 2021 the government announced that two of the country’s major planned rail projects, HS2 and Northern Powerhouse Rail, would be scaled back significantly. Instead, the Integrated Rail Plan for the North (IRP) will provide some improvements to rail connectivity. At a regional level, plans continue to develop on West Yorkshire Combined Authority (WYCA)’s much-anticipated Mass Transit System.

Extensive public realm and transport improvements have continued to progress across the city centre, including works associated with the ‘Connecting Leeds’ programme being undertaken by Leeds City Council, West Yorkshire Combined Authority and bus operators. This includes ongoing improvements to Corn Exchange, the completion of the Headrow Gateway and the £6.4 million package of new segregated cycling and walking routes forming part of the ‘Cycle Superhighway’. The Corn Exchange public realm, which is expected to be completed in Spring 2022, will see the creation of a new public space, with more greenery, more outdoor seating, street furniture and opportunities for alfresco dining. The Headrow Gateway has led to the completion of significant enhancements to bus, pedestrian and cycle infrastructure and the public realm. The Connecting Leeds programme seeks to improve sustainable and active travel modes by making them safer and more accessible, for example through the provision of new cycle lanes and bus lanes. This will deliver a better-quality environment for residents and visitors, whilst encouraging them to adopt sustainable modes of travel. This positive momentum is set to continue in the future, given Leeds City Council’s adoption of the Connecting Leeds Transport Strategy and Action Plan to 2024.

In November 2021 the government confirmed its decision to scrap the eastern leg of HS2 from the West Midlands to Leeds, and also the Northern Powerhouse Rail. New plans to upgrade existing railway lines represent a departure from previous plans to deliver new railway tracks and a new station for Leeds. The government also confirmed that its £39 billion plans for Northern Powerhouse Rail, to deliver a new high speed line linking Manchester and Leeds via Bradford, would no longer go ahead. These decisions have led to uncertainty and disappointment with regard to high-speed rail connections to Leeds, and the network’s capacity to handle the forecast growth in rail passenger numbers over the next 20 years.

Despite the downgrading of to HS2 and Northern Powerhouse Rail plans, WYCA has welcomed £830 million of funding to progress work on the region’s transformative integrated transport system. The funding supports WYCA’s plans for a Mass Transit System and improvements to the bus network. Further progress on the regional Mass Transit System will create a more accessible and inclusive transport system for Leeds and the city region. The programme will build on the existing momentum in Leeds to deliver an integrated network of walking, cycling, bus, rail and mass transit routes connecting communities to jobs and education opportunities. There are plans to continue development following the publication early in 2021 of the West Yorkshire Connectivity Infrastructure Plan and Mass Transit Vision 2040.

In order to deliver an integrated approach within Leeds City Centre, the public realm around the station needs to deliver the required connectivity and experience for people arriving in the city. Crucially, there is an important opportunity for Leeds City Council to invest in the Neville Street area to the east of the train station to improve connectivity between the city core and the South Bank.

The first phase of such improvements to the ‘station arrival experience’ is already underway at City Square.

Progress on the reimagination of City Square comes within the context of the wider regeneration of the railway station area, including the Leeds Station Masterplan. The recent RIBA-organised competition to plan the transformation of City Square will create a vibrant pedestrian space that acts as a gateway to the city centre for visitors, with proposals for an ‘urban woodland’ public realm. Also contributing to the transformation of City Square is the completion of the refurbished Queen’s Hotel and construction starting on the 138,012 sq ft City House development.

In 2021 it was announced that the new government-owned policy bank, the UK Infrastructure Bank (UKIB), will open its head office in Leeds city centre. This represents a key move in raising the profile of the city as a financial hub, whilst delivering new jobs to the city. The presence of UKIB in Leeds is expected to create valuable opportunities for collaboration with Leeds-based businesses. This move adheres to the wider government decision to ensure that policy makers are located within the communities they serve, whilst ensuring that economic growth and job opportunities are more evenly distributed across the UK.

These various schemes and programmes in Leeds seek to address connectivity and transport challenges whilst seeking to fulfil the city’s growth ambitions and its aim to become carbon neutral by 2030. In doing this the various public realm, transport and connectivity enhancements are set to deliver a more well-connected and accessible city.

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Contacts

John Cooper

Partner, Real Assets Advisory – Development

Simon Bedford

Partner, Real Assets Advisory - Development

Nolan Tucker

Director, Real Estate