The region of Yorkshire & Humberside witnessed a tremendous 2018 with a 40% increase in the total transaction volumes in 2018, turning around their total transaction volume from the previous year
Richard Brooke, Associate in Cushman & Wakefield’s Capital Markets team in Leeds, said: “2018 has been a huge year for the Yorkshire and Humberside region.
“In the industrial sector, 2018 has provided not one, but two of the largest funding deals the city has ever seen totalling over 720,000 sq ft, both of which are sited at Logic Leeds. Aberdeen Standard Investments (ASI), advised by Cushman & Wakefield, are forward funding both industrial/distribution units. The popularity of this sector remains underpinned by the strong occupational fundamentals; driven by the continued ascent of online retailing. Prime rents for Leeds stand at £6.25 per sq ft, and we are expecting to see further rental growth, in line with the majority of UK regional markets. Prime yield are stable at 5.0% for the region although where tenants are committing to longer leases, we have seen transactions showing yields of below 5.0%.
“It has also been a standout year for the Leeds office market in terms of investment transaction activity. 2018 saw nine transactions involving office assets of £20m+ which is well above the 5-year average. Achieved yields range between 4.4% and 8.3% with the strongest yield being achieved on Evans’ sale of 1 Park Row to CCLA. Prime yields have trended inwards over the last 12 months to currently stand at 5.0% and whilst the yield achieved at 1 Park Row is well below this level, this particular asset is considered reversionary as prime rents in the city centre have now reached £30 per sq ft.
“The retail market has been a little more subdued over 2018 with limited transaction activity. Prime yields currently stand at 4.5%, but as we move into 2019, there are a number of key sales being launched to market which will demonstrate where retail yields are settling. With [a] continued strong performance in the industrial and office sectors, it will be interesting to see if the yield gap to retail is reduced further and possibly even reversed over 2019.”