THE £43.7m acquisition of a major office block by Leeds Council, believed to be the largest post-Brexit deal in the country, demonstrates the strength of the city as a business destination, developers have said.
Work is due to be complete on the six-storey 3 Sovereign Square, close to Leeds Railway Station, this September, with national law firm Addleshaw Goddard signed up on a 17.5 year lease as the anchor tenant. Leeds Council has bought the building from joint developers Kier and Bruntwood in order to “further cement” the authority’s role in the city’s economic resurgence, it said.
The block, which has retail and leisure space on the ground floor, is built on the site of the old Queen’s Hall, a former concert venue that once hosted rock legends like The Clash.
Executive member for regeneration, transport and planning, Coun Richard Lewis said: “We’re absolutely determined to drive the strong Leeds economy forward, while being a compassionate city that embraces opportunity for all. Our proactive approach to economic development underpinned by wise asset investment and management enables the council to be a real catalyst in stimulating the local economy.
“It has enabled us to play a pivotal role in Leeds’ economic resurgence, working closely in partnership with a resilient and innovative private sector. This investment should further cement that approach.”
Tom Gilman, managing director of Kier Property North, said the significance of deal “could not be over-estimated”.
“It shows that, confidence remains in property as an asset class,” he said. “The fundamentals of the commercial property market are very sound, offering significantly better yields than other investment classes, driven by attractive and secure income returns.”
Craig Burrow, director of Leeds at Bruntwood, said there had been strong investment demand in the site, “despite the national uncertainty”, which demonstrated “the strength of Leeds as a business destination”
He said: “Leeds City Council have furthermore demonstrated this confidence with this long-term investment in the local economy which will stand the city in good stead for the future.”
While the majority of the site has been pre-let, the developers have agreed to pay the Council lost rents for the vacant parts, and associated costs such as business rates, for two years.
However, Henrie Westlake, from site agent Knight Frank, said he is “confident” it would continue to attract investment.
“As the post-Brexit turbulence subsides we anticipate increased appetite for property,” he said.
“During marketing we received strong interest in the development from a range of UK and overseas investors attracted by the quality of the building and the strength of the Leeds market. The decision to proceed with the Local Authority was based on the Council’s desire to invest in prime assets in the city in order to benefit from the success of the region.”