Manchester impresses as tech drives employment growth in UK cities

Employment in the technology sector is set to rise across the UK regional cities by 16% over the next 10 years, says real estate adviser, Knight Frank.

The firm’s inaugural ‘Future of our cities’ report reveals that technology, media and telecoms (TMT) has dominated take-up in the first three quarters of 2019, accounting for 23% of the market.

In Manchester, take up in the year to date is put at 34%, slightly under the regional hot spots of Leeds, Cardiff and Edinburgh, but significantly higher than in London, where TMT accounted for 21% of take-up, highlighting the growth of the sector outside of the capital.

Notable deals in Manchester include Hewlett Packard into Circle Square and Booking.com to Enterprise City.

Darren Mansfield, partner in Knight Frank’s commercial research team, said: “The influence of the technology sector on the economic fortunes of the UK continues to grow.

“Since 2002, the economic output from tech industries has grown significantly, with further upward trajectory forecast for the next 10 years.

“This picture of growth is mirrored in the scale of demand for office space being acquired across the UK. The sector representation in the UK’s regional cities has grown considerably from 15% to 23% in the past four years.”

The report looks at the key themes impacting 10 of the UK’s regional office markets and identifies Manchester as having the largest business growth overall – some 22% above the national average.

It also suggests the UK’s biggest cities are only going to get bigger, with secondary property markets on the peripheries of cities identified as changing the dynamics of traditional city boundaries.

Exemplary commercial property developments on the outskirts of Manchester are currently extending the city’s boundaries and helping push business growth by 41%, according to the research.

Examples of new developments extending the traditional Manchester city boundary include NOMA, Circle Square and First Street.

Head of Knight Frank in Manchester, David Porter, said: “This explosive demand for city and town centre working and living will continue.

“Those who embrace change by supporting development to extend traditional boundaries and provide taller, denser schemes will capitalise on this – but only if they grow their amenity and academic offer at the same time.

“Manchester has a world-class academic offer which attracts students from all over the world, many of whom choose to stay in the city and the challenge is to provide business accommodation that offers quality at the right price and can help foster start-ups as well as established big hitters.

“For peripheral towns the key to growth is urbanisation, creating new centres around transport hubs and recognising the different offer they have to attract jobs and new markets. Towns like Blackburn are already doing this well.”

According to the report, Manchester’s talent retention saw some 46% of graduates choosing to stay in the city after completing their studies, a figure only topped by Edinburgh at 47%.

The city has a graduate population of 64,463, the second largest of all the regional cities.

Using space as a service is also identified in the report as being a major area of commercial property growth in the short to medium term.

Mr Porter added: “Co-working operations are growing but represent a relatively small proportion of occupied stock. For example, roughly three per cent of the stock in Manchester is let to a third party co-working provider.

“Nonetheless, their influence is significant and supports the changing dynamic of offering flexible space and a different level of service.

“Once the domain of start-ups, SMEs and short-term contract-based work, co-working facilities have gained universal appeal across a broad range of organisations.

“The increased importance of ‘service’ will mean we will see more landlords partner with a co-working provider or create their own brand offering.”

Knight Frank’s ‘Future of our Cities” report looks at the key themes impacting 10 of the UK’s regional office markets: Aberdeen, Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Manchester, Newcastle and Sheffield.