“THE regional property market will outperform London in 2016-17,” said Neil Sinclair, chief executive of regional property investor and developer Palace Capital.
Palace’s board believes that devolution, the Northern Powerhouse and the Midlands Engine all strengthen the case for a strategy focused outside of London, and it was one of the very first London-based developers to invest in regional property.
This was a conscious commercial decision rather than an accident, said Mr Sinclair, especially with London office rents reaching £75 per sq ft and more.
“There are just better returns in the regions than in London,” he said. “We’re not just buying anywhere, we’re selective about what and where we buy and we like to focus on city centre sites and university towns.”
In April 2015 the firm acquired Bank House in Leeds for £10m, marking its first foray into the region.
Since then they have been investing in regional sites from the £24.2m Broad Street Plaza in Halifax to sites in Manchester, Milton Keynes and Sutton.
Mr Sinclair and executive director Richard Starr took TheBusinessDesk.com on a tour of their Leeds acquisition, Bank House, where a major investment is going on at the former AXA Insurance offices, who moved out after a rent raise.
The hands-on Palace team are overseeing the redevelopment of the 13,300 sq ft offices, which will be expanded into adjoining space to create 16,600 sq ft of offices. They are set to be completed in January 2017.
Open plan offices have been created in the space with a huge glass feature wall in its atrium.
“We have the restrictions of a listed building here but we’ve made it much more useable. We need to try and differentiate our properties from the competition,” said Mr Starr.
He said that LED lighting, break areas and an astroturfed outside space would bring the interior of the building into 2016 – and Mr Sinclair is working on a delisting that would make the development run smoother.
The Bank of England, for whom the house was built, will remain tenants until the early 2020’s.
It will be the end of an era when they leave as although it may not be the most attractive building in Leeds, Bank House, which was unsurprisingly built for the BoE, has a much more interesting history than many of its counterparts.
Mr Sinclair said that the Bank of England invested in regional centres following the Great Train Robbery in 1963. Bank House in Leeds was built for them to house large amounts of bills to go into circulation in the North, to prevent anything like it happening again. Security is still tight at the building, which shreds around two tonnes of unviable £20 notes a week.
The Bank will be moving out in around 2023, as it is predicted new notes (which launched to great excitement with the £5 note this year) will need less shredding and will be viable for longer.
Mr Sinclair said the overall picture was positive. “We view the current environment as an opportunity,” he said – a sentiment which makes him an honorary Yorkshireman in our book.