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Leeds: the next urban logistics hotspot?

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Leeds could see a surge in warehouse development after data revealed that property investors were seeing the best urban logistics returns outside London.

Leeds heads the highest total investment returns forecast table outside London, with 22.3 per cent, followed by Amber Valley (21.3 per cent); Newcastle (21.1 per cent) and Manchester (20.6 per cent). Wakefield comes a respectable 10th in this table, with investment returns of 19.4 per cent, according to the data from Knight Frank.

 “The urban logistics market has attracted strong investor interest, particularly over the past 18-months, and Leeds is at the forefront of this interest, thanks to its superb motorway network, the availability of labour, strong rental and land value growth and lack of stock,” said Henrie Westlake, partner and head of investment at Knight Frank in Leeds

“Many institutional investors were already looking to tilt their portfolios towards the logistics sector and the COVID-19 pandemic has led them to intensify their push. Allocations to the UK industrial and logistics sector have increased from 21.0 per cent five years ago, to 36.4 per cent in the second quarter of this year.

“Those already invested in the sector are looking to increase their exposure and new entrants are looking to enter the market and this is driving competition which is, in turn, fuelling pricing. Despite strong investor sentiment for urban logistics, obtaining scale in this arena can be tricky. Urban logistics assets have relatively low lot size and development options are relatively limited,” Westlake said.

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