Member Article

Investment in Yorkshire commercial property increased by 37% to £920 million

Investment in Yorkshire’s commercial property sector increased to £920m in 2013 – a 37% rise on the previous year and the highest volume achieved since 2010.

This is according to new analysis by national commercial property consultancy Lambert Smith Hampton (LSH).

In addition, the analysis shows that retail and leisure was the most popular asset class among investors in Yorkshire.

Deal volumes in this sector represented 44% of the annual aggregate investment figure and amounted to £400m, a 7.3% increase on 2012.

However, it was Yorkshire’s industrial and logistics assets that saw the highest increase in activity, with investment volumes rising from £93m in 2012 to £318m in 2013 and accounting for 35% of the region’s annual aggregate investment figure, although the market remains highly polarized as buyers focus on prime assets in the best locations. Key deals included the Tritax acquisition of a Sainsbury’s distribution warehouse in Sherburn-in-Elmet for £48.5m, reflecting a net initial yield of 6.39%, Cordea Savills’ forward funding of a four-unit retail park in Scunthorpe for £23.6m, reflecting a net initial yield of 6.1%, and Fulwood Invest SARL’s purchase of the Walker Morris office building on King Street in Leeds for £10.5m, reflecting a net initial yield of 8.02%. Abid Jaffry, Regional Director of Capital Markets, said: “Activity in the Yorkshire region remained strong due to a good supply of prime investment stock. Investors see real value in the region, which is demonstrated by the range of acquisitions.

“The latest edition of Lambert Smith Hampton’s quarterly UK Investment Trends report reveals that London remains the primary target for commercial property investment, accounting for 53% of the UK total.

The capital attracted £23.9bn of deals during 2013 – the highest figure recorded since the report began in 2002. Other regional markets also saw a strong finish to 2013 – namely the South East, East Midlands and Scotland – with total regional investment volumes rising by 80% in the second half of the year in comparison with the first to drive an overall annual increase of 61%.

Ezra Nahome, CEO of Lambert Smith Hampton, said: “The UK commercial property sector had a stellar end to 2013, with investment at levels that we haven’t seen since before the global financial crisis.

“The improvements in the economy, coupled with the continued attraction that large lot sizes and Central London prime stock hold, have been an important driver of this growth. “We’re still around 35% below the 2006 peak but, crucially, there is less of a reliance on gearing this time around. “There is now a considerable degree of momentum behind both the UK economy and property market. The increase in demand that we’ve seen almost across the board for investment-grade commercial property and an improving outlook for occupiers means that investors should be targeting total returns of 12-14% this year. “UK property’s relative attractiveness versus other asset classes and other international markets will continue to fuel investor demand, so we may well see deal value break through the £50bn barrier by the time the year is out.”

This was posted in Bdaily's Members' News section by Clare Burnett .