Contact Us
News

We Need To Talk About Leeds: Is It Manchester's Biggest Local Threat?

Northern Powerhouse Rail (or HS3), the high-speed rail line planned to link Manchester and Leeds, could bring great economic benefit to Manchester.

But might it also mean Manchester's real estate losing out to lower-cost Leeds?

Ahead of MOST: The Manchester Office Sustainability & Tech event on 6 November, Bisnow looked at the love-hate relationship between Lancashire's first city and Yorkshire's business capital. Who will come out the winner?

Placeholder
Arriving at Leeds City Station

It hasn't attracted much attention in Manchester, but Leeds is having a great year. Winning the Channel 4 relocation, plus Caddick's plans for new studio and media hubs in anticipation of growing media and digital sector occupier interest, comes as take-up soars.

In the first quarter of 2019, the Leeds city centre registered the biggest increase of any city in the UK in terms of occupier take-up, rising 65% from Q4 2018, and ending 65% above the 10-year average, according to Knight Frank. The total was modest compared to Manchester, with Leeds scoring a Q1 total of 222K SF, as opposed to Manchester city centre's 315K SF or the wider Manchester market's 508K SF. But still good, and rising fast.

The build-to-rent sector is also on the up: this week another 20-storey tower plan has been lodged, adding to a string of proposals from Get Living, BAM and Moda/Apache. JLL data suggests 29 sites capable of delivering 10,000 units, doubling the city centre residential stock.

Though all from a lower base than Manchester, Leeds is growing fast, and according to Manchester property gurus like JLL North West Chairman David Lathwood, the Yorkshire business capital should expect to be the big beneficiary of HS3.

“I feel the HS3 line will be far more beneficial to Leeds than Manchester," Lathwood said. “Connectivity to Manchester has always been better in terms of access to Birmingham and the West Coast, and now Leeds has stronger opportunity to benefit from the proposed HS3.

“The move will definitely improve commerce between the two cities and will mean people can live in the town of their choice — whether for personal, financial or business reasons — much as the HS2 line would have allowed a daily commute from Manchester to London by offering a one-hour journey."

Like anyone else who has travelled in the overcrowded, slow-moving transpennine service of today, the idea of something faster linking Leeds and Manchester is appealing. Even so, Lathwood shows hard-core Lancastrian levels of not-fussedness about the real implications for property.

“Practically, I don’t think there will be a huge impact on commercial property in either location. However more people potentially living in either city will have a positive impact on residential development, as the improved transport links could attract even more people to city-centre living given the huge investment we’re seeing, especially in the ‘economic miracle’ that is Manchester," he said.

Placeholder
3 Sovereign Square, Leeds

The idea that it is Leeds' residential offer, rather than Leeds' office offer, that will determine the outcome of the latest War of the Roses, is one widely shared. The assumption made by many property folk on either side of the hills is that Leeds will become an additional recruitment pool for Manchester, to the benefit of both.

Savills Northern Head of Residential Development Jamie Adam is already living the transpennine dream. He lives outside Leeds in Harrogate, and commutes to Manchester. Significantly, the dire state of the rail service means he drives, a solution he declares to be ridiculous but doesn’t feel he can change. HS3 would make a big difference.

“A high-speed service would be good but it is the additional capacity that we really need on that line,” Adam said.

Leeds has a wonderful future as a supplement to Manchester, Adam said, an opinion that will appall his friends and family back home.

“My brethren in Leeds will hate me for saying this, but Manchester is the economic powerhouse of the North, and I don’t think anyone really debates this any more, everyone just has to accept that," he said. "But it is absolutely the case that Leeds and other cities have their specialist skills, and that Manchester can’t and shouldn’t be all things to everyone. Improving connectivity between the cities and Manchester will be a good thing for everyone.”

Placeholder
City Square, Leeds

So much for the view from Manchester looking east down the line to Leeds. What is the view from Leeds, looking west to Manchester?

Cushman & Wakefield Head of Leeds Keith Hardman said Leeds can grow without chipping corners off Manchester’s economic growth.

"Improved connectivity can only benefit Leeds and the wider city-region’s economy and I don’t think this will be at the expense of Manchester or vice versa — the benefits will be spread across the North,” Hardman said.

He pointed to office developments like CEG’s monster 1.1M SF plans for the Globe Road/Water Lane area immediately south of the railway station, suggesting it will be among the first to benefit from improved transpennine rail links. Leeds is particularly well placed to capitalise and the timing couldn’t be better. 

Hardman looks forward to some concrete evidence that HS3/Northern Powerhouse Rail is really happening, with his hopes pinned on the Chancellor of the Exchequer’s autumn statement.

Lambert Smith Hampton Head of Leeds Jon Anderson acknowledges that Manchester has momentum, but thinks both cities will benefit.

“Faster connectivity and reducing congestion on the roads and railways would benefit both conurbations with people and goods able to move between the two far more efficiently," he said. "The centre of Manchester has improved at a far higher rate than we have seen in Leeds. The new HS2 station will help, but better links across the country are as important as those down to the capital.”

Anderson has stern words for Prime Minister Boris Johnson.

“He needs to find funding for the project and get on with it. If this was China or Japan, we’d have Crossrail and the Northern Powerhouse Rail link operational by now,” he said.

Top rents in Leeds hover around £32/SF, a modest but real discount on central Manchester's £35/SF, a discount which is sustained at lower price-points for refurbished office stock. Meanwhile new-build assets like Bruntwood/Kier’s 80K SF 3 Sovereign Square are providing attractive options for those who want city life, but don’t need central Manchester.

Leeds may not have the massive airport, the football or the lovely weather which blesses Manchester. And of course, Leeds is in Yorkshire which, in the minds of all Lancastrians, raises some difficult conceptual barriers. You don’t wipe out centuries of bitter Northern intransigence with a single high-speed rail line. But Leeds has formidable strength in the tech, digital and media sectors and those barriers need to come down. If Manchester does not embrace Leeds as its partner, it may find it has to confront it as a rival.

Register to join the conversation about the Manchester office market, its tech occupiers and the path to sustainable growth at the MOST: Manchester Office Sustainability & Tech event on 6 November.