Leeds City Council has added to its “investment portfolio” by buying land on which it’s going to build three industrial units at the Logic Leeds site just off Junction 45 of the M1.
The purchase, for an undisclosed sum from Muse Developments, is the fourth addition to the council’s portfolio in a year.
The main thrust of the portfolio has been to buy existing buildings with secure tenants. This time, it’s more speculative: the council will have to find tenants to fill the units (totalling 100,000 sq.ft) when they’re ready in late spring 2018.
What, you may ask, is the cash-strapped council doing, spending millions on real estate?
Well, the rationale behind the portfolio is pretty simple: the council says it can generate extra income for services by borrowing at low interest rates to make the acquisitions, and then letting the properties for more than it’s paying for the debt. A second aim is to “assist in the regeneration of the City and to invest in employment generation opportunities”.
It’s the second time the council has purchased from Muse at Logic Leeds. Back in August it bought an 80,000 sq.ft unit occupied by retail giant Amazon.
In July it spent £44m on buying a city centre office block on Sovereign Square, and in December it bought an office building at Thorpe Park.
The council says it’s been advised that demand for units of the sizes proposed at Logic Leeds “is currently very good with few competing new build opportunities”.
“The property has been offered to the council to acquire on a one to one basis off the market rather than being put to the open market,” says a council report on the purchase.
What are the four acquisitions in the “investment portfolio” worth in total? So much of this stuff is shrouded in secrecy that it’s difficult to say.