As many as 1,600 Yorkshire businesses may review their property options over the next five years as leases signed during the property boom of the late ‘80s and early ‘90s reach expiry, fuelling talk of a return to speculative development. Guy Gilfillan, Head of our Yorkshire business, explains.
Our National Property Database holds detailed data on more than 800 impending lease expiries of over 5,000 sq ft across Yorkshire. Market intelligence suggests a further 800 may come to light once unreported deals and sub-5,000 sq ft lettings are taken into account.
Businesses looking to relocate will find fewer options available
A high proportion of these businesses will no doubt be looking to relocate. However, the availability of industrial and office accommodation across Yorkshire has fallen dramatically since the downturn in the economy. Furthermore, a large proportion of this space is unlikely to meet occupiers’ needs in terms of quality, quantity and location.
Pre-lets could drive local market recovery
With no new development underway, there is a growing feeling that an increasing number of occupiers will consider pre-letting new floor space, giving rise to a return to speculative development activity. An example is the decision by KPMG to consider pre-let/pre-purchase opportunities for their office relocations in both Leeds and Manchester.
It was pre-letting activity which led us out of the last property downturn. And, while finance generally is still tight, if a developer is able to demonstrate a good quality pre-let, a number of lenders would be keen to commence discussions in respect of funding the project.
Localism and planning legislation could have a negative effect
One issue which could potentially become a barrier to the large-scale, high quality development is the impact of Localism as part of forthcoming legislation on the Planning regime.
Anything that promotes unreasonable delay, abortive costs and uncertainty may lead to either reduced levels of development activity or the possibility that new schemes won’t be put forward. Local Enterprise Partnerships have to work with local authorities and businesses from across the region to co-operate on planning issues and prevent the Localism agenda from becoming a charter for unreasonable Nimbyism.
Indications that commercial activity will increase
Irrespective of this, the market is sufficiently close to reaching a balance between the lack of available stock and the current and anticipated levels of demand, indicating that a return, albeit somewhat limited, to commercial development activity is likely over the next 12 to 18 months.