Region’s property sector is bucking the national trend

The UK’s property sector has been going through something of a lull in recent months.

The ongoing uncertainty around Brexit and the general uneasiness about the economy has led to some downbeat assessments of where the commercial and residential sectors are heading

But the North West and Manchester in particular are showing no sign of slowing down at any time in the near future.

The number of cranes on the skyline bear witness to the huge amount of activity that is currently taking place in the city.

This week TheBusinessDesk.com is running a series of articles focussing on the property sector.

The articles are being produced in partnership with law firm Freeths.

At the last count there were 78 schemes under way in Manchester – just under double the nearest rival Birmingham.

According to Deloitte’s latest crane survey construction activity has hit record levels in the region.

Simon Bedford, partner and regional head at Deloitte Real Estate, said: “To have construction figures this healthy is somewhat of a surprise given a myriad of market uncertainties.

“Developer confidence is a key indicator for economic health and to have this many significant construction starts over the last 12 months, especially in speculative office schemes, is testament to the resilience of the regions and appetite for growth.”

According to Deloitte the residential sector is driving record levels of development activity.

A total of 14,480 residential units are under construction – double that of two years ago.

Last year 2,569 units were delivered to market, which was the highest level in 12 years and Manchester’s development pipeline suggests 2020 will see the addition of the most homes in nearly 20 years.

Manchester’s office sector has more than two million sq ft of office space under construction across 13 schemes; a notable increase on the consistent levels of 1.5 million sq ft reported between 2015 and 2017.

A quarter of the office developments in 2018 were pre-let.

Simon Bedford said: “If Manchester had featured in the recently published North American Crane Index, it would have ranked number two – behind Toronto but in front of Seattle, Los Angeles and Chicago. That might have seemed like a remarkable stat a few years ago given Manchester only had one crane in the sky in 2011, but today the figure is a massive 78 sites under construction.

“The marked increase in office construction levels is reflective of the continued draw to all these regional cities for major businesses. Investor confidence is thriving, as the rise in office pre-let deals clearly demonstrates. With creative, media and tech occupiers leading some of the major office deals in 2018, twinned with growing diversity in talent, these are good foundations for regional growth in the years to come.”
Deloitte’s findings are backed up by JLL.

The firm revealed that Manchester has remained the top regional city with the most office take-up since JLL began recording the data over 15 years ago.

Manchester’s tech sector is the leading driver of demand for office space.

Last year, office space take-up totalled more than 1.75 million sq ft. With a 54% increase on the 10-year average, this is the best year on record.

Elaine Rossall, UK head of offices research at JLL, stated: “When thinking of the UK’s strongest property markets, Manchester continues to be in a league of its own.

“Job creation is at record levels and is spread across a range of sectors. Commercial development is increasingly catering to occupier demand and this is translating into positive, continued growth across the other property markets.

“The current strength is also against a backdrop of the UK economy performing better than expected in the run up to Brexit, with Manchester really bucking expectations.”

Manchester boasts a wide range of job opportunities and has seen the largest wage growth since 2008.

It is forecast to gain an additional 10,000 office workers by 2021 than it did in 2018.

This growth in jobs, workers, and wages is positively impacting the office, industrial, and residential property markets.

There are a variety of new and expanding business districts in this city in the Northern Powerhouse that will continue to play a big part in supplying the high demand for office space.

David Lathwood, lead director in the north-west for JLL, said: “Each year we look at the UK’s big six regional centres, it’s clear that Manchester isn’t just already outperforming other cities but that the opportunities in front of it are rich and diverse.

“This year, it’s also clear that Brexit uncertainty hasn’t had the same impact on occupier sentiment than it has in other areas of the country. The fact that we’ve had another record-breaking year of office take-up means the priority for the market now is ensuring that development rates can keep up.”