A positive outlook for Leeds Real Estate Market

• Yorkshire will represent around 30% of all the UK logistics take-up in 2021, as the region remains so attractive to occupiers
• Yorkshire office take-up figures have increased with many of the half a million sq ft of enquiries still active
• The ￡41m acquisition of Clarendon Quarter by Aberdeen Standard Investments represents a significant deal in 2020 for the Yorkshire region
• Investor interest is healthy in Leeds with Channel 4's move to the Majestic and the promotion of Leeds United putting a spotlight on the city
• Significant improvements in investment and take-up into the Office sector in 2021

“2021 represents a significant new chapter for UK real estate, according to predictions made in CBRE’s 2021 UK Real Estate Market Outlook.

The logistics sector in particular has remained a front runner throughout the pandemic providing an essential role in keeping food and goods moving. The sector broke another quarterly record with over 13m sq ft transacted in Q4 in the UK and Yorkshire is set to represent around 30 per cent of all the UK logistics take-up this year, as the region remains so attractive to occupiers. The year ahead will continue to focus on building more resilient supply chains, increasing safety stocks and diversifying suppliers to prevent future disruptions. This restructure will increase the demand for additional warehousing space in the UK.

For the office sector, investment and take-up is expected to recover steadily throughout 2021 after a challenging start to the year. Office take-up figures in the Yorkshire region have improved significantly, with many of the half a million sq ft of enquiries still active, as occupiers now have a clearer idea of how much space they will require in the longer term. Research shows that whilst working from home is a trend that will continue, it will form part of a hybrid strategy which also incorporates office working and we expect to see increasing demand from nearshoring from the public sector and industries including big tech, fin tech and life sciences.

The PRS market completed a ￡41m acquisition of Clarendon Quarter by Aberdeen Standard Investments which was a significant deal in 2020 for the region. In addition, the BTR Sector has seen increasing interest from funds in single family housing in strong locations with good links and infrastructure. Moving forward, the majority of funds will likely balance city centre, suburban and senior living, but we may see an increase in modular housing to speed up delivery in order to meet demand.

Investor interest remains healthy in Leeds with Channel Four's commitment to its move to the Majestic acting as a real boon and the promotion of Leeds United putting a spotlight on the city. Real estate is undoubtedly still an attractive prospect and it’s no surprise that the hottest sector is industrial/warehouse. Despite a dip in the high street retail sector, out of town retail is producing some good returns with yields reaching over 7% - a big differential to the industrial market yields of around 5%.

The retail real estate market has seen the biggest dip as a result of the pandemic, but it has also seen the most dramatic acceleration of existing trends which were prevalent in the UK prior to COVID-19. We expect the retail sector to slowly recover throughout the year with a bounce back of sales to come after Covid lockdown 3 and the structural transformation of retail real estate will continue. CBRE expects online retail will account for 30% of all retail by the end of 2025.

The hotels and hospitality market has been affected the most by COVID-19 but this has led to the swift creation of a host of new innovative operating formats designed to respond to the rapid and unpredictable constraints. Landlords and tenants have worked together to increase the flow of supply chains and release facilities for public use in support of the nation. This year it is predicted the sector will be led by fit-for-purpose, limited-service hotels designed to suit domestic budget travel, with stronger operator-landlord relationships being formed to help fight the competition.

Residential property is also forecast to deliver strong returns this year and CBRE forecasts almost continual year-on-year growth in the multifamily (institutional rented) sector, to ￡6bn in 2025 - for the first time equity will focus on UK family assets as opposed to city offices. We forecast the owner-occupied sector will remain stable throughout the year with house prices and rents increasing by 1.0% and 0.9% respectively.

After a challenging year with much uncertainty, there are green shoots emerging and 2021 is looking promising for UK real estate. We proceed with a positive outlook for the months ahead while actively encouraging our partners to make the most of the new opportunities this year presents.”

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About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas is the world’s largest commercial real estate services and investment firm (based on 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.