Leeds Crane Survey 2023

The Leeds development cycle

The Crane Survey data indicates that development activity in Leeds began accelerating following industry recovery in 2014 and represented the start of the current development cycle. Development in Leeds has remained generally strong, with fluctuations and increases across all sectors in the last eight years. This steady acceleration has been bolstered by Leeds City Council’s (LCC) policy foundation and investment in sustainable development and growth in the city. The successful use of Statutory Planning Development frameworks and planning guidance are further powering the city’s regeneration, with a strong pipeline of developments in South Bank as well as Sovereign Street and Mabgate areas.

Leeds has seen significant developments in healthcare and research in 2022, with construction commencing on St. James Hospital’s new Pathology Lab and CEG’s Drapers Yard continuing at pace. LabCorp is set to occupy the latter research facility in early 2023. In addition to this, the £450m redevelopment of Leeds General Infirmary continued in 2022. This development represents a huge investment that will expand Leeds’ NHS Trust’s services and provide patients with world-class care based on the latest technologies, treatments and research. Disused buildings on the site have continued to be demolished, with substantive construction expected to start in 2023 if funding is released. The construction is part of the government's £3.7bn commitment to create 40 hospitals by 2030.

The Leeds Innovation Arc SPD was publicly consulted on until January 2023. It sets out a vision for physical changes to the west of the city centre, including public spaces, public transport and buildings. The SPD aims to accelerate a nationally important and internationally recognised economic and knowledge engine by connecting the already renowned academic, research and entrepreneurial establishments with new developments to catalyse investment and placemaking in Leeds. The SPD will help deliver Leeds’ priorities to create climate conscious developments that champion inclusive growth, health and wellbeing through collaborations between LCC, the institutions and the private sector, building on the entrepreneurial ecosystems that the MIT REAP programme has begun. The delivery of these new developments will further Leeds’ reputation as a thriving hub for innovation, finance, digital and tech.

Stakeholders are already working in partnership across the city to reach overarching aspirations and sustainability goals. In order to meet net zero goals by 2030, the universities and Leeds City Council are collaborating to develop carbon neutral and sustainable city-wide practices and initiatives. The University of Leeds Climate Plan August 2022 update shows a £2.8m investment to fund a Subsurface NetZero project led by the university’s new Geosolutions Leeds research centre. Furthermore, Leeds PIPES, the largest district heating network (DHN) which is being brought forward by LCC, continues at pace. The Leeds PIPES DHN delivers low carbon, sustainable energy to residents and businesses across Leeds. Such initiatives do more than just benefit the wider sustainability goals of Leeds – they also promote the University of Leeds and position it as a centre of innovation, firmly solidifying its place in the UK’s top ten research universities.

Residential developments under construction continue to be located predominantly outside the city core, with the delivery of SOYO phase 1 and phase 2, and the Phoenix development on Saxton Lane, bringing more activity to the eastern fringe of the city centre, whilst providing a mix of 370 for sale units and 840 BTR units. Other significant developments, in the South Bank area, include the Guinness Partnership’s Points Cross development and City Life’s The Radius (Springwell Gardens).

The Crane Survey finds sustained high levels of construction activity in the residential sector and our data suggests a positive future pipeline. The foundations have been set to support a growing residential population in the city centre and we foresee an optimistic picture for the future of city centre living. In addition to the growing provision of BTR attracting and retaining an influx of young professionals, ‘For Sale’ homes, larger units and townhouses such as at Ironworks and Points Cross, are also set to attract different types of occupiers such as families, and right-sizers, to create successful and mixed multi-generational communities that will boost Leeds’ overall sense of vitality.

Office market trends and sustainability ambitions

Leeds saw two new starts in the office sector in 2022. This is under the Crane Survey average of 4.3. However, the volume of office floorspace under construction remains just as strong as in 2021, with 858,448 sq. ft currently under construction in the city. This shows a large-scale of development being retained and delivered across Leeds.

In addition, according to data from the Leeds Office Agents Forum (LOAF), office take-up remains strong despite national economic uncertainty, with Q4 of 2022 alone recording 201,321 sq. ft of take-up across 36 office deals, the strongest Q4 for five years and a 44% increase on Q4 figures year-on-year. This change in floorspace could be connected to recent trends of new roles for the office and overall office flexibility, as businesses consider hybrid ways of working in a post-pandemic world. Workers now have the option to choose from home working, at local community hubs (e.g., coffee shops.), on-demand event spaces, co-working spaces and more. Businesses will need to consider these options when acquiring office floorspace. Many are set to opt for a smaller ‘core’ office with greater amounts of amenity space, to accommodate more flexible ways of working.

The letting of 6 Queen Street to the Financial Conduct Authority, a new occupier for Leeds, was the largest Q3 city-centre deal. This new occupier will bring over 100 new jobs to the city and reinforces Leeds’ reputation as a hub of financial, digital and tech talent. Figures provided by LOAF note that ‘business and consumer services’ were the most active sector in office floorspace take up, accounting for 28% of total market activity. The Kalifa Review of UK Fintech (2021) indicates that Leeds City Region and Greater Manchester combined are the second largest hub in the UK for Fintech, with moves being made to establish Leeds as a place that supports innovative business and activities.

National companies continue to expand their presence within Leeds, further confirming the city’s growing profile as a centre for finance, digital and tech. The Bank of England has followed through on plans for a new Northern hub as part of a review of its geographical footprint across the UK, which comes following a Leeds staff expansion in Spring 2022. The Bank is set to continue recruiting ahead of the new Northern hub, with the exact city centre location yet to be announced. The hub will act as a continuation of the longstanding 200-year history between Leeds and the Bank of England. Elsewhere, Channel 4 has submitted a bold proposal to place Leeds at the forefront of its company growth, following the recent move of its national headquarters. This includes a further £100m into the 4Skills hub in Leeds, which helps provide a pathway for disadvantaged young people to enter the industry. In addition to this, a proposed expansion of the digital content team is expected to create 200 jobs in the city by 2024.

There is still much debate around the future role of the office, as Leeds continues to respond to changing demands and seeks to deliver offices that offer flexibility and ‘high-quality’ amenity space that meet sustainability targets.

Businesses are increasingly favouring amenity-led office spaces, with tenants migrating and relocating to the new city-centre offerings. Arup has confirmed the relocation of its Leeds base to landmark development, 11 & 12 Wellington Place, in 2023, expanding into 35,829 sq. ft of the office space. Like many of the emerging office developments across Leeds, 11 & 12 Wellington Place provides a host of amenity offerings, including ground floor commercial space and basement gym. Similarly, CEG’s Globe Point, completed in Q3 this year, also provides high-quality amenity space for tenants including spaces for yoga classes, business lounges, café and co-working zones.

The completion of Allied London’s refurbishment of the Old Alea Casino, known as Department, into a creative work, wellness and social destination will continue to support the reinvigoration of the Leeds Dock - it’s already home to Sky’s Digital and Technology Services Campus. Allied London has delivered a completely flexible workspace at the Dock which places amenities at the centre; a trend seen to be increasing in a post-pandemic market.

The delivery of amenity-rich office buildings will continue with the commencement of Aire Park Plot MUS3a and the future office pipeline. CEG’s One Globe Square, Latitude Yellow and 9 Wellington Place are all expected to start in 2023, all located in highly accessible areas within larger Masterplan schemes that promote sustainable travel and utilise the city’s transport improvements. Emerging Masterplan schemes such as Town Centre Securities’ and Glenbrook’s joint venture, Whitehall Riverside, will further add to the Grade A, amenity-rich office space being developed within the city. The office element of the Masterplan will add c.215,000 sq. ft of office floorspace to the city centre across two buildings, with c.8,000 sq. ft of commercial ground floor space provisioned. The scheme will be constructed within the city core, and will also provide an aparthotel, multi-storey car park, two-building residential scheme and a new public realm and landscaping proposal which will enhance the existing riverside environment with sustainable travel routes.

Leeds Office Agent Forum (LOAF) observed that occupier interests remain firmly centred on sustainability as the market continues to become increasingly ESG-focused, particularly for larger businesses. It is clear that demand continues to outstrip supply with regards to this. This is reflected in higher interest for developments with strong environmental credentials and sustainable benefits, with Grade A rents at £36 per sq. ft in Leeds City Centre. Two new office starts this year, Aire Park and West Village, are being developed with high sustainability credentials. West Village will be delivered to achieve net zero carbon in operation, as well as the new build elements being net zero in embodied carbon. This is being implemented through several initiatives, including careful materials choices, green walls and blue green roofs.

The demand for sustainable office developments can also be seen through office pre-lets, such as BREEAM Excellent rated City Square House. It’s set to be completed in late 2023 and has over 60% (83,131 sq. ft) of floorspace pre-let. Figures collated by LOAF show Grade A supply in Leeds City Centre is currently 806,000 sq. ft, but more than half of this total is still under construction, while the Grade A vacancy rate for built product is approximately 2.5% . This demonstrates that demand for these offerings continues to outstrip supply in the city.

Climate change is a core issue for the development industry as a whole. This is manifesting in Leeds through the growing appetite for refurbishment in the office sector, as well as through the growing flexibility and adaptability of new build offerings. As employers and tenants become increasingly aware of their carbon footprint, the demand for highly sustainable office spaces is expected to increase, with new-build and high-quality refurbishments poised to follow suit.

Leeds is taking steps to meet future sustainability goals through a number of public sector initiatives that are guiding developments across the city. The emerging Local Plan will further emphasise these goals. The first update focuses on planning policies that will help the council deliver its climate emergency commitments. Alongside the Local Plan, the Leeds’ Climate Commission’s Leeds Carbon Roadmap details the actions needed to achieve the city’s long-term vision of becoming carbon neutral by 2030. A Climate Action Plan has also been prepared by Climate Action Leeds. It aims to bring local communities and organisations together to transform Leeds into a zero carbon and nature-friendly city by the 2030s. The organisation has a £2.5m contribution from the National Lottery Climate Fund to help deliver this.

The Building for Tomorrow, Today SPD and Update Note (2020) has also helped to guide and achieve a strong portfolio of BREEAM Excellent and Very Good developments. The carbon neutrality goals of the city are also materialising in emerging developments, with Net Zero carbon office developments currently under construction. This follows the 2021 completion of Leeds’ first net zero carbon commercial building at Citu’s The Place within the Climate Innovation District.

While the Leeds office market continues to deliver innovative developments with net zero carbon status or BREEAM excellent, such as the recent completion of Globe Point in 2022, it should be noted that the residential market is typically not as far advanced. Although there are examples of sustainability-led residential developments in Leeds, with the award-winning City Climate Innovation District, more work must be done to democratise sustainable residential developments.

Delivering sustainable neighbourhoods

New residential developments continue to be located predominantly in the South Bank area, housing six out of the 15 developments under construction. Three are in the northeast fringe whilst one sits along the water fringe area to the southeast. There are many smaller-scale residential developments being delivered across the city core. These include the conversion of three office buildings and one Grade II listed former Victorian school. We expect to see more focus on repurposing existing buildings in the city core to help meet sustainability targets. These developments will help to minimise embodied carbon as well as providing central locations for living, minimising the need to travel.

Mixed-use developments in Leeds are increasingly focusing on amenity provision. There is a clear movement towards a more European model of cities, which focus on a series of neighbourhoods that provide an offering for a variety of demographics, as well as diverse amenities and services within a short walking or cycling distance. These principles are already being delivered in a number of developments across the city, with increasing numbers having a mix of one, two and three-bed apartments that will attract a range of people to the city centre. The increase in the number of three-bed apartments, will retain young families and create mixed communities in the city centre. This trend is growing, with 10 residential developments under construction this year, all provisioning a housing mix of one, two and three-bed apartments, providing 3,226 units to the city in total. The South Bank specifically will see 64 three-bed units across Springwell Gardens, Doncaster Monk Bridge-North Site, Tower Works (phase 1) and Whitehall Road (Latitude Purple).

There were no retail-led new starts in 2022, much like 2021. However small-scale retail and commercial spaces continue to form the ground floors of larger mixed-use schemes. These include SOYO (phase 2), Whitelock Street Student Development and the Technology Campus Student Development which, when added to the Hyde Park Picture House refurbishment, will bring 37,907 sq. ft of commercial floorspace to Leeds.

2022 has seen the delivery of several investments in the culture and leisure sectors. The refurbishment of Hyde Park Picture House, a joint investment from Leeds Grand Theatre and Opera House Ltd, will see the revitalisation of a listed building in the University Core. The internal and external alterations include an additional second cinema screen to the basement and a three storey, 8,804 sq. ft, extension. This scheme is set for completion in Q1 2023. Consistent investment across leisure, culture and arts in Leeds can also be seen through the recently completed Howard Assembly Rooms in 2021, and continued investment from the Arts Council and Leeds Inspired, a grant scheme that supports art events and projects across the city which ranges from £100 to £10,000.

Celebrating culture helps creates a vibrant city where people want to live, work and play. 2023 will see the delivery of Leeds’ 2023 Year of Culture, where the city’s diversity will be celebrated and championed through a multitude of creative experiences, whilst helping to place Leeds’ cultural offerings firmly on the map. Moreover, Leeds United’s improving performance in the Premier League will undoubtedly bring increasing numbers of visitors to the wider city area. Talks of Elland Road improvements continue, with shareholders set to continue with plans to renovate the West Stand and increase the stadium’s capacity to 55,000 if the club remains in the Premier League.

Despite limited construction activity in the retail sector, the future pipeline for large-scale mixed- use developments is expected to bring 53,228 sq. ft of commercial floorspace. Many of these developments, such as Calls Wharf and Crown Hotel, will be in the Water Fringe, whilst The Store House will provide new floorspace to the city core. The increased presence of mixed-use development show that the city is becoming more connected and neighbourhood-oriented.

Former plans for a student residential development within the old Debenhams building in the city core have been overturned in favour of a new Leeds Flagship Flannels store. This scheme will inject much needed vitality to the Leeds retail space following the 2021 closure of major High Street giants Debenhams, which left a significant gap in the retail core. The new Flannels store in Liverpool provides a much more experienced-based shopping experience and we expect to see something similar provisioned at the Leeds Flannels store.

Despite Leeds retail footfall being down 16.3% compared to pre-pandemic levels in 2019, this is broadly in line with the national average and the overall footfall in the UK High Street has gone up by 8% when compared to last year. This is a sign that the retail sector is experiencing a slow recovery post-pandemic. The growth of a residential population and recent developments in connectivity and public realm improvements will be essential in supporting the post-pandemic recovery of Leeds.

There were two new hotel starts in 2022, which will deliver 392 rooms, provided by the Hyatt at Sovereign Square No.2 and the Jubilee Hotel on East Parade. Sovereign Square and the Jubilee Hotel are expected to be completed in Q1 2024. This is double the amount of activity compared to the last two years with only one new start each year since 2020. There were no completions in 2022. One hotel development, The Wesley Hotel, is in the pipeline and is set to provide 70 new rooms in the city core. This is a refurbishment to the existing Grade II listed former Methodist Church to create a 4-star hotel. In the future, we expect to see a trend for more luxury high end hotels in the city continue, as increased investment into public realm, culture and leisure attracts more visitors to Leeds.

City centre greening

Leeds has increased its focus on city centre greening as a direct response to the Climate Emergency and Sustainability goals to attract new people and improve the quality of spaces for all existing and future residents and workers.

The Leeds ‘Grey to Green’ programme is an initiative by the City Council to enhance climate resilience through integrated green space and green infrastructure. The new green space and public realm investments at Corn Exchange, Meadow Lane, Crown Point Road and Sovereign Square are in the southern area of the city centre. This will support the creation of a South Bank neighbourhood and improve walking and cycling routes that will connect the South Bank to the city centre area.

Leeds has been recognised as a ‘Tree City of the World’ with five flags being flown over its major parks in Temple Newsam, Roundhay, Middleton, Golden Acre and Kirkstall. This follows Leeds’ 25 year green initiative to plant 5.8m trees across the city. It also forms part of Leeds’ ambition to become carbon neutral by 2030. Part of this scheme included the Corn Exchange Connecting Leeds project, which planted trees to line the streets and develop new crossing points designed to help pedestrians safely navigate through the space. These works were completed in 2022.

The ‘Our Spaces Strategy’ lays foundations to ensure that the delivery of any new public spaces meet Leeds City Council’s vision to create a people-centred and culturally astute city that is accessible and looks as good as it feels. An example of this is the completion of Meadow Lane with a pedestrian and cycleway that provides a protected two-way cycleway between Bridge End and Great Wilson Street.

In addition, the Meadow Lane transport and public realm investment marked the beginning of delivery of the new Aire Park by Vastint, more specifically their city park element of their wider masterplan. The six-acre public park is set to be completed in Autumn 2023 and will support the creation of vibrant neighbourhoods in South Bank. Aire park is the largest new city centre green space in the UK20, and will build on the city’s people focussed ambitions to prioritise green spaces and pedestrian and cycle links to increase accessibility and inclusivity across Leeds. In addition to this, Aire Park will assist in catalysing the number one priority for Leeds – to reduce carbon emissions and improve air quality in the city centre.

Leeds’ focus on better neighbourhood creation is becoming increasingly environmentally and socially sustainable. It is essential to consider designs that integrates both green infrastructure, as well as a variety of amenities when creating places that people want to live. Developments in the mixed-use pipeline include City Reach, The Store House, Calls Wharf and Crown Hotel. They are set to bring forward nearly 15,000 residential units and more than 55,000 sq. ft of commercial floorspace.

The Guinness Partnership’s Point Cross development will also build on the existing investments in public realm and green infrastructure in the South Bank, set to bring forward over 900 residential units. Further investment into the South Bank in the Temple district, which once was defined by textile and manufacturing industries, and now a mixed-use working community, will catalyse a vibrant neighbourhood to the south of the city centre. The array of developments ongoing and expected within South Bank are playing an important role in solidifying its future vibrancy. CEG’s Temple Masterplan is firmly at the forefront of the South Bank’s growing success, with a range of schemes underway such as from the community theatre company Slung Low’s temporary activation of 131 Water Lane, to Labcorp’s emerging research facility at Drapers Yard and prominent lettings at the newly completed Globe Point. Add these developments to the recently completed residential offerings in the area, such as the Ironworks, and it is clear that the South Bank is fast becoming one of the city's most vibrant areas.

Like all UK cities, Leeds is at risk of development disruptions caused by economic and financial challenges. According to the Deloitte European CFO Autumn Survey 2022, European CFOs identified the impacts of inflation, a shortage of skilled labour and rising energy costs as the three factors likely to hold the most significant risk for businesses over the next year. Economic and geopolitical uncertainty and subsequent supply chain disruptions will undoubtedly impact future development timescales and growth as these headwinds cause retractions in risk-taking by European CFOs across all sectors.

The challenge for the future will be Leeds’ ability to sufficiently respond to the changes being presented to it, whether that be continued post-pandemic trends, macro-economic factors, or future-proofing sustained climate concerns. Leeds continues to show resilience in the face of change, remaining future-focussed and the only net contributor city in the north, but it must continue to innovate and respond to these changes and challenges in order to see and experience widespread growth and vitality. If this happens, we will likely see a continuation of the positive sustainability, innovation and amenity-led themes and aspirations currently materialising across Leeds:

1. Carbon neutrality and ESG: Looking to the future of Leeds, it can be confidently assumed that carbon net zero and consideration for the climate emergency will remain to be an ever-increasing priority that will underpin emerging policy, pipeline schemes and emerging applications. We expect all sectors to increase their consideration of these priorities, with the current Leeds Local Plan review refocusing local policy to further ensure this. High-profile developments, such as the Leeds Teaching Hospitals NHS Trust are on track to meet the NHS carbon emission targets, with Leeds University setting their own annual net zero ambitions. It will be essential for all stakeholders in the city to work together, innovate new approaches and share lessons learned to make significant strides and meet the sustainability targets.
2. Sustainable transport: In addition to improvements made towards walking and cycling in the city centre, Leeds City Council and West Yorkshire Combined Authority continue to progress the region’s Mass Transit System 2040, which will create a more accessible and inclusive transport system for the region. 2022 has also seen the commencement of the Sustainable Travel Gateway works at Leeds Station, as well as the continued development of sustainable transport through the Connecting Leeds vision. Further investment in Leeds’ transport network is expected, as the city aims to become more connected internally and across the region.
3. Cultural and vibrancy investments: Leeds2023, the international Year of Culture, was born from a determination to succeed by Leeds City Council and is a celebration of diversity with a multitude of creative experiences taking place across the city. Culture will continue to grow for years to come, as ‘Leeds Museums & Galleries’ is set to be supported by £1.6m of annual funding from the Arts Council England. Conversations are continuing to be held for the British Library northern base at Temple Works - a landmark scheme central to the regeneration of the growing South Bank. Multi-sector investment has also been strong in the city in recent years with culture, transport and community centred programmes set to enrich and improve the lives of Leeds residents and visitors. Leeds2023 will utilise the new public realm and connected areas of the city to host a range of cultural events that will bring residents, businesses and visitors together. eeds2023 will also open up the city for everyone, through creative education and increased opportunities for young people, through unique and innovative events such as the Women for the World (WOW) Barn event in May 2023. Events like these will act as a showcase of cultural transformation and enhance the outward view of Leeds as a diverse and thriving city.
4. Skills investment and innovation: Leeds continues to position itself as a place of innovation, and attract future talent to its growing educational offerings, through existing universities and emerging establishments. The growing attraction of Leeds for businesses has been brought about by ongoing investments in the city centre by the public and private sectors. The advancement of public policy to drive the development of the Innovation Arc is expected to see this develop further. Leeds looks set to retain a growing number of graduates from the region’s universities. This talent retention will continue to bolster Leeds’ reputation as a thriving hub of multifaceted skill and talent.
5. Residential trends: Despite short-term macro-economic challenges facing the residential development sector, city-wide investments made in the past few years, such as creating new neighbourhoods and amenities, improving connectivity and delivering new green infrastructure, are set to catalyse long-term growth in city centre living and lift Leeds’ sense of vibrancy.
6. Retail: While the High Street continues to face some adversity, Leeds is making moves to change the role of the retail core and ensure its future. Retail and leisure offerings must continue to evolve and meet the needs of visitors to the city as well as existing and future city centre residents, and we expect this will need to include a more experiential based offering.