Leeds building backlog creates lack of residential rentals
Overwhelming lettings demand coupled with ‘drastically increased’ activity in the sales market, as well as 10,000 undelivered apartments under building schemes, means available rental space in Leeds city centre is at an all time low.
Leeds city centre sales and letting agents are calling for all stakeholders, freeholders and developers with planning consent for apartments to review previous decisions to put certain developments on hold. There are currently no noteworthy residential developments under construction which means that the pipeline for new apartments is restricted.
There are nearly 10,000 undelivered apartments within approximately 35 schemes that have planning approval in Leeds city centre. This means that if a developer was to commence building now, it will be around 2 years until any apartments are ready for occupation.
Jordan Yorath, of Countrywide which owns both the Bridgfords and Flatsinleeds brands in Leeds city centre, commented: “If just 10% of these properties are delivered in this time frame, I am confident that rising sales values and increased pressure on the lettings market will mean that a developer who takes the bold step to start building now, would reap the rewards on completion.”
He added: “Looking at the city centre market, by the end of September, the number of properties actually available to let, accounted for just 1.5% of all city centre apartments.”
This is a striking increase in occupancy since 2010, when a report published by Rachel Unsworth of Leeds University titled ‘Leeds beyond the boom’ estimated that occupancy levels across the 6 leading letting agents was more like 92%.
Jordan added: “If you are new to the city centre and searching for an apartment it is a difficult time as many agents simply do not have anything to offer until December and existing tenants are regularly extending and staying put in their current property as the cost of moving coupled with the lack of availability means it is simply not worth the time and effort of tenants moving within the city.”
Out of approximately 1300 apartments currently under full management by Countrywide, for example, in their Leeds city centre branches, between the 1st of September and December 31st, 65 tenants have given notice to vacate during the period, 56 of which have already been re-let leaving just 9 on the market.
The city centre lettings and estate agents, Flatsinleeds are now appealing to freeholders of buildings traditionally used for offices in the city centre to reconsider their office space business plan.
“Most modern office occupiers seek grade A purpose built office space and a large amount of the currently marketed office space is not what the modern tenant seeks and this has left a large amount of unused and unsuitable office space available to let.
“Apartments have become a commodity that is in short supply to the open market in Leeds city centre, the freeholders need to take a fresh look at the lettings market and realise that residential use would virtually guarantee them income and a high level of occupancy all year round. When you factor in the cost of rates for an empty office space, the argument only gains more weight.”
Leeds city centre has experienced phenomenal commercial success and growth this year with Trinity and the Arena opening and planning for the Hammerson Victoria Gate shopping centre being granted permission. There is also a highly publicised shortage of Grade A office space, with some office agency practices claiming as little as 6 months worth of supply remains available.
Jordan believes that: “the likely knock on effect of increased success in the commercial market is likely to yield an increase in employment figures locally which will further strengthen the demand for this year, a total of city centre apartments.”
“With a lack of new apartments in the pipeline, this will mean in the short term rents are likely to increase even further and a strong likelihood that people will have to look further away from the city to fulfil their accommodation needs and commute for work.”
He added: “Leeds is a vibrant city in a new phase of recovery and possibly the early stages of growth. Residential development has to be given a kick start and I think that the initial phase of this may well appeal to developers taking a different view on their exit strategy.”
Recently, Flatsinleeds and Bridgfords have acted for several developers where they have ‘built to let’ and successfully let all properties within a very short period of time, including the Algernon Firth Development for Rushbond which has 110 beds, 46 apartments at Indigo Blu for Merin properties in 2012 and some smaller schemes in Morley and Pudsey town centres this summer.
“Marketing and managing a new development of apartments has become our speciality” said Jordan. “We have a great knowledge of apartment blocks and their development so working with developers from conception enables the branches to offer added value to our clients by advising them not only on what their income will be, but what is needed to maximise this and minimise voids.”