When investors were climbing over each other to reserve as yet un-built apartments in Leeds City Centre, it seemed inconceivable that the boom would ever end. According to the City Living Report of 2007, the pipeline of new apartments was almost 10,000, which would have doubled the total stock levels- the 2010 report concluded that just 500 new apartments would be completed by 2015 and this may yet prove to be an ambitious prediction.
Many of the schemes which were in the pipeline have been simply left behind by market conditions which are almost unrecognisable in comparison to those which prevailed through the noughties.
Dozens of proposed schemes have fallen by the wayside- a few were unlucky and were caught out by savage market conditions but most were destined to fail. Lumiere, once dubbed ‘the tallest residential tower in Europe’ was an ambitious project – very few architects and engineers have experience of building such structures, the construction is hugely complex, and no funder is going to support a scheme without significant forward sales. It was no surprise, then, that the scheme stalled and ultimately failed, and it will be even less of a surprise if the 10 year old plan for a 13/14 storey scheme to deliver a hotel and offices comes to fruition. What goes around comes around!
Green Bank is another example of a scheme which whose success rested entirely on the buy to let market. Sitting on the extreme Western edge of the city centre and sandwiched between the busy Globe Road and the main railway lines, it was never anything more than a very good marketing campaign. It was heavily promoted in London where investors were told of its ‘heart of the city’ location and no end of high quality imagery projected a scheme in isolation of it’s more than challenging environs. This was a great example of mind over matter for the duration of the campaign which included an extravagant marketing suite which ironically did more to draw attention to the nature of the location than it did to promote the attractions of living there. Ultimately, what had been a surface car park is once more a surface car park and it is going to take some radical thinking and a sea-change in the market for Green Bank to see green shoots.
Bridge House, directly across the road from the Yorkshire Post building, encapsulates what went wrong- this is a secondary location surrounded by a harsh road network. There is no amenity, no shops or green space and no sense of community- it is surrounded by a mish-mash of low grade buildings, poorly occupied offices and little else. And yet, it was to be developed initially as a 17 storey glass tower of apartments and latterly as a hotel.
At the heart of the story it is the degree to which people’s common sense was swayed- we were asked by a bank to look at the proposed scheme and to run our eye over the values which had been produced for the developer by a local agent. It took us 2 minutes to work out that the rents didn’t make sense- figures like £757.39 kept appearing in the monthly rent column and it took us a further minute to work out that the rents had been calculated by a formula to ensure that they represented 125% of the cost of a 75% mortgage. The agent didn’t have the integrity to provide an honest appraisal, the developer didn’t care and it seemed to pass the bank by completely. Needless to say, the scheme has never been built.
But, with rentals demand approximately 20% higher than it was at the height of the sales boom, and signs of an increase in sales activity, city living is in great shape. Occupancy levels are at record highs which means that there is council-tax paying population of around 14,000- they shop, they eat and they drink!
And what of the future? Britain is highly unlikely to become a nation of renters but it seems certain that we are likely to rent for longer than we have traditionally done and so there will be more demand than supply- we are already seeing the evidence of this. The Private Rented Sector is the subject of much debate and in the South-East at least major institutions are turning their attentions to the opportunities. This trend is unlikely to filter through to the provinces in our view and it will be left to the private sector to fill the void.
Rushbonds’ recent purchase of Crispin House, is testament to a changing market- 82 fully furnished loft style apartments with a residents gym, concierge and secure parking, developed specifically for the rental market. As the sales market recovers, the rentals market will lose stock and it is schemes such as Crispin Lofts which will help ensure that the city centre has the housing offer to support predicted economic growth.
It’s a brave new world.